My wife and I bought a $600 high-quality photo scanner and spent the time to cull, organize, and scan our 10,000 or so pre-digital hard copy photos. We are so glad we did! Now, they are a seamless part of our digital photo collection. Our pictures are always with us and we can easily search by date, topic, location, or face—memory dividends we cash in on frequently.
But there are services available to do this! Couldn’t we have spent a few more dollars and had someone else scan our photos, saving countless hours of work while getting the same or better quality result?
Unfortunately, no. Those services may look like a great idea at first glance, but the companies offering photo scanning services charge a lot of money to provide a lower overall quality product, AND you still do the lion’s share of the work.
When my wife and I became minimalists and decided to scan our numerous boxes of photo albums and loose photos, we thought a photo scanning service would be the way to go. I researched numerous companies and concluded that if you want your old photos to be completely digitized, readily accessible, and in chronological order, you really need to do it yourself. Here are 5 reasons why you should keep your money in your pocket and take on this project yourself.
You Spend A Lot of Your Time Either Way
This was a big eye-opener: only you can decide what photos to keep, and culling and organizing is what takes the most time in this project (we culled out about 30%). Saving time wasn’t in the cards. You, the owner of the photos, are the one who must remove the photos from the albums (or frames) and arrange them in size order in the company-provided boxes and insert note cards with year and event name (if allowed). Then after the scanned photos are returned, spend countless hours by hand fixing rotation and re-dating them to get some semblance of chronological order. Since this does not change the photo file’s metadata, this work likely disappears if you change photo organization solutions.
You still have to deal with any photos the company rejected (too thick, too small, too large, too misshapen, too much residue on photos, etc.). This would have been thousands of photos in our case, so I would have needed to get my own scanner to capture them anyway.
These companies are only scanning the easiest photos in the easiest possible way (for them). All the essential prep work of culling and organizing, post work of hand rotating and re-dating, as well as scanning the more challenging photos remains in your hands no matter what. That’s the heart of the job. What companies are offering to do—for a hefty fee—is the simple part. You have to invest the time no matter what.
You Get to Include More of Your Photos
Companies limit photo size from 3×3 to 8×10. That means all your old photos outside that range will either not be in your digital collection, or you’ll end up scanning them yourself anyway. I was able to scan wallet sized photos (sometimes I taped two together to make it work), photo booth strips, misshapen, fragile, or torn photos, thick old polaroids, and larger photos (e.g., 8×14).
Companies reject photos with any residue. Thousands of our photos had sticky residue, old glue, or paper stuck to the back after being carefully removed from old family albums and scrapbooks. I was able to coax almost all of these photos through the scanner by turning them or removing residue (I couldn’t scan only about 20 photos out of 7,000!). A company would never even try to do this, but we did the work and we are so glad to have all of these photos in our collection.
Photo on Left: Having fun with our kids in a photo booth
You Get Much Better Chronological Ordering
Companies don’t add past dates to the photos and generally require photos to be organized by size. So all 3x3s are together, 4x6s are together, 5x7s, 8x10s, etc. Yikes! This means that they will show up in your online photo collection in this jumbled non-chronological order unless you spend many hours re-dating them. I organized and scanned our photos dating them by month and year regardless of size. As a result, we had to do only very limited re-dating (e.g., putting the baby shower before the birth in the same month). Unless you hand re-date them, your old photos will show up in your collection with the date the company scanned them, not when they were taken.
Fun wallet-sized photos a scanning service would have rejected (I taped the two together and scanned them)
You Get a Better Product
In addition to having a more complete photo collection and better chronological ordering including better file metadata when you scan it yourself, you can add location or event name in the photo file name for improved search capability. You also have more control over scan quality. Some companies scan at 300 dpi (dots per inch) while many scan at 600 dpi. Doing it myself, I could choose based on the photos and adjust the file size. I scanned most of my photos at the higher quality 600 dpi, and some important photos at 1200 dpi. This quality and flexibility just isn’t available from a company.
A scanning service would have rejected this circular-shaped photo of our family supporting our son as a baby.
You Save Money
I put this last because saving money wasn’t my highest priority. If companies provided a service worth paying for, I would have done it. But why pay a lot more money to a company only to get an inferior product and wind up putting in the same amount of time as if you scanned them yourself?
We spent $600 on a new, high-quality scanner. We could have sold it and recouped much of the value, but we decided to give it to a relative to scan her photos (and she will pass it onto others in our family). I researched estimates to scan our 7,000 photos—one company estimated $4,300, another company $4200, while a third was $1668. The least expensive I found was $1,340 for non-chronological scanning. By scanning our photos ourselves, we got a better product and saved a lot of money. Your savings, if you do it yourself, will vary based on the number of photos you need scanned. The only way we could get the great results we now enjoy—at any price—was to do it ourselves.
Now that all of our old photos are scanned in by date, we have enjoyed and shared them far more in the last 2 years than we had over the last three decades combined. These are treasured memories of our lives. Doing the work ourselves was well worth it!
A photo from my parent’s wedding — so much fun to readily share these old photos with family and friends!
My wife and I are celebrating our 35th wedding anniversary this year (and 38 years of being a couple). While on a public ferry in Luxor, Egypt we quizzed each other on the many other ferry boats we had ridden together. We each remembered examples the other hadn’t. It was a fun walk down memory lane from the British Columbia ferry we rode on our honeymoon to a recent public row boat from the cities of Rabat to Salé across the Bou Regreg river in Morocco [see photo above].
In another example, my Uncle Dave (on my wife’s side) passed away recently. When reminiscing about what a great uncle he was with Aunt Bonnie (his wife), I pulled up my photos on my laptop of Uncle Dave using our photo software face recognition feature. Aunt Bonnie and I had a lovely moment together reminiscing and celebrating her husband’s life and how he had been a part of our lives.
In each of these examples we were cashing in on our memory dividends. And by doing it with someone close, we enjoyed it even more.
The power of compounding is an important part of a financial plan. Over many years (decades) interest and dividends earned from investments grows exponentially and can outgrow the original amount invested. Memory dividends work similarly and I would argue are more important investments than our financial ones. We have the opportunity to create lasting memories everyday with ourselves and with our friends and family. But often we could do better in taking the time to cement them in our memories so we don’t forgo opportunities to enjoy them later.
Here are a few ideas to help maximize our memory dividends—both for making them and for cashing them in.
Invest in Close Long-Term Relationships (and cash in on those investments regularly)
Having hundreds of “friends” on social media is not the same as having several close friends (and family) that you invest quality time with. While Facebook attempts to leverage the power of memory dividends by frequently reminding us of our old posts (which often make me smile), it misses the bigger point of building long-term, real human relationships.
I have known my oldest friend since the 5th grade. Other than a year as college roommates, we haven’t lived near each other for going on 40 years. But we have worked to stay connected through letters (yes, before email), phone calls, and hanging out when visiting back home. Looking to invest even more in our friendship, we created a new tradition in 2011. Each year since (COVID excepted) we have enjoyed a long weekend in a city somewhere around the country to see a football or baseball game together. The game is an excuse—we just hang out and catch up on the world and each other. We joke about our joint high school graduation speech that I screwed up, reminisce about our time in college, analyse our favorite sports teams, and share about our kids whom we both know so well. We invest in each other and we cash in on our memories together.
With my best friend at our first annual game weekend together (Lambeau Field) — with my inexpensive watch
I now similarly connect with my family and other close friends. As a full-time world traveler, I have numerous scheduled video calls each week with family and friends to help keep these connections strong when I am far away. When I am back in the US, I spend months visiting with family and friends—making new memories and cashing in on the dividends from these long-term relationships.
Investing the vast majority of our limited time into our closest relationships provides the highest return in memory dividends.
Divest of middling and casual relationships.
When I became a minimalist, I divested of the physical possessions and tasks that did not support my top values. This meant letting go of things I liked but were preventing me from achieving what I wanted to do the most. It changed who I was.
Likewise I divested of relationships that were preventing me from fully focusing on the close family and friends I wanted to invest more in. When I retired early, I discovered that most of my work friends were just that—friends at work. Once I stopped working, these friendships quickly dissipated as they were not built on a deep human connection, but one of a temporary nature to fulfill a professional need. To be clear, I am happy to answer a phone call, email, text message, or chat during a chance encounter, but I no longer proactively invest in peripheral relationships. Instead, I redirect my limited resources into more meaningful long-term relationships—with a focus on spending quality time in person.
We need to be careful not to spread ourselves too thin and inadvertently starve the relationships that mean the most to us.
Make The Day-To-Day A Little More Memorable
While it is easier to recount fabulous vacations to exotic places like Egypt, the Grand Canyon, or other exciting and photo-worthy destinations, don’t forget to make memories in your day-to-day life. Having a weekly family game night, pancakes on Sunday mornings, frequent local camping trips, and time reading books aloud together all helped mark our time spent together with family and friends. For example, to make our family staycations more fun and memorable, our family of four each took charge of a day. During each person’s day they made a meal, picked a place to eat out and decided on the entertainment for the day which varied to include, board games, bake-offs, museums, movies, lots of hikes, and once even an escape room. One person was in charge and the rest of the family agreed to happily follow (reducing decision fatigue!). We started this tradition when our kids were a bit older and we made fabulous memories that we enjoy reliving together.
Results of our family bake-off. Mine came in last (far right) despite including a bribe of a fine whiskey in the middle.
Take Photos and Look at Them
We tend to take a lot of photos of our time on vacation, when our children are young, and at big events (weddings, graduations, holidays, and sporting events). But we often don’t take a photo of playing a board game together, sharing a home-cooked meal, or of a walk together along the neighborhood trails. Don’t let the memories of the enjoyment of day-to-day life go undocumented. Having a lot of great photos is one thing, but looking at them is another.
If you were born before 1980, you probably have a sizable portion of your photos as hard copies—my wife and I certainly did. Scanning in over 7,000 pics was a lot of work, but well worth it. Now our pictures are always with us and we can easily search by date, topic, location, or face. My dad was recently on my mind (he passed away from Alzheimer’s in 2024), so even though I was abroad, I pulled up my photos of him to remind me.
We have looked at and shared these old photos more in the last 18 months than we had in the last 20 years! When we start reminiscing with our family and friends we are quick to share photos of those times together.
With my Dad in 1996, well before the effects of Alzheimer’s took hold of him. (from my old hard copy photos I scanned)
Reminisce
We can strengthen our memories through recall. We can certainly do this ourselves. I keep a list of all of the books I have read (at least the books I could remember when I made the list in 2009). I enjoy being reminded of the stories and concepts as I occasionally peruse the list. Keeping a journal can help. I have long-resisted keeping a diary or journaling. Honestly it sounded hokey. But my wife journals everyday and I have come to appreciate its value. She keeps a simple record of where we were, who we saw, what we did and ate each day. It has been invaluable in helping us cash in on memory dividends.
Reminiscing alone is certainly good, but doing it with family and friends compounds the memory dividends as you help each other remember even more than you would by yourself and we get to enjoy them together. This can be done in many ways. My wife and I created a list of how we celebrated our wedding anniversaries each year and of the plays we have seen together. We keep a small box of “What we are grateful for” that we bring out each Thanksgiving. We enjoy reading what we wrote from years past and we complete a new card, investing for future memory dividends.
Quizzes help us learn school materials and they can be a fun game with family and friends to help us reminisce together and strengthen our memories. My daughter is great at coming up with fun quizzes (our favorite camping spot?, favorite food on vacation?, our favorite home exchange?, and so on) that get us all sharing fun memories together. We will often quiz each other at the end of a vacation which helps cement our memories and starts cashing in on our memory dividends we just made—no need to wait!
Investing in memories and cashing in on them isn’t about living in the past. It is about enjoying your life today with those closest to you and building a life of contentment. Make new memories AND make time to cash in on these memory investments with family and friends.
Having an emergency fund is foundational to healthy finances and our pursuit of financial independence. From an unexpected car repair to the loss of a job, the primary job of an emergency fund is to help you weather unexpected financial challenges that could derail your financial progress. Depending on your situation, you may have anywhere from $1,000 upward to 6 months worth of expenses in a readily accessible account standing watch over your financial castle while you sleep a little more soundly. As important as that is, I want to talk here about the important side-hustle I have assigned my monetary firemen as they wait in the station training and polishing the emergency fund fire truck: self-insurance.
By strategically managing my insurance deductibles and not purchasing the myriad of minor insurance products on the market, I have been able to save a lot of money, and hopefully you can too.
In a nutshell, self-insurance is a financial strategy where you set aside money to pay for losses instead of buying insurance. It’s also known as self-funding. You save money instead of paying premiums to an insurance company. You pay for losses out of your own pocket instead of filing a claim.
To be clear, traditional insurance is an important financial tool to mitigate risks from rare, but costly, catastrophic events such as a house fire, a lawsuit from a car crash, death, or other major liabilities. Insurance can also be helpful when more common events might be devastating to your finances. When I was younger (and poorer), a new car tire was a major expense in my budget, whereas today I can afford to replace a car that is totaled. So as my emergency fund strengthened, my ability to self-insure also increased.
Insurance companies are businesses and make money from the premiums we pay – a lot of money when nothing happens, and a little less when they need to pay significant claims. They take advantage of our salience bias – a cognitive bias that predisposes us to focus on what is the most prominent, visible, or emotionally striking events in our environment. Insurance companies monetize our fears. They also play on our desire to conform (e.g., “9,384 people have insured this trip”). Almost everyone has a memorable story of when they did use their warranty or travel insurance or when it might have been useful (like the one time I spilled water on my 8-month old $1,000 laptop), but while memorable, these stories represent a small minority of our total experience with insurable products.
Like investing in the stock market, self-insurance requires risk tolerance and time. While an insurance company spreads risk across many participants, self-insurers spread risk across all types of insurance products and over time. Instead of looking at each situation individually (e.g., should I pay $30 to cover this $1000 airfare?), we look at all of our family’s self-insurance opportunities over time. For example, paying to replace a phone dropped in the water once in 15 years is more than offset by not paying for phone replacement insurance (at $100+ per phone per year) for a family’s four’s phones for that same period. The total of all the premiums for unused insurance for every flight, hotel, electronics items, etc., would far exceed the combined total of the replacement costs I actually incurred from self-insurance.
I buy insurance for catastrophic liability to include home (high deductible), car (high deductible), umbrella, and term life (never “whole” or “permanent” life!). But my wife and I skipped survivor insurance for my pension and there are other areas, listed below, in which my self-insurance strategies have saved me tens of thousands of dollars (not including compounded returns from investing the money instead) over the past three decades.
Auto collision and comprehensive
I drive well. My wife drives well. In our 79 years of combined driving history we have had only 3 at-fault claims (one involving another vehicle). The last one was 11 years ago. My two kids are both safe drivers. They have had zero at-fault claims in their 12 combined years of driving–the highest risk time for young drivers. Our vanity is not insulted if we have superficial scratches on the vehicle (whether caused by us or someone else) – if the car still works and is safe, we ignore it. If you or a member of your family are not good drivers, then you may wish to take a more conservative (i.e., expensive) approach to your car insurance.
Strategy: I have always kept a high deductible for my family’s situation. Starting with $500 when I was young, I quickly pushed it to $1000, and then to $2500 over the last 11 years. For our cars older than 6 years, we dropped collision and comprehensive altogether even with teenagers driving as we saw they were capable, smart drivers and we could afford self-insurance. I never buy extended warranties (or undercoating) for cars.
Savings from low auto insurance premiums helped pay for our son’s college
Product warranties and extended warranties
For numerous purchases such as TVs, computers, printers, blenders, appliances, phones, etc. etc., stores (online or brick-and-mortar) often ask me if I wish to purchase an extended warranty. I never do. I also never buy coverage for repairs or replacement caused by human error. I couldn’t afford them when I was poor and I could afford to self-insure when I wasn’t. Turning down hundreds of warranty offers over the last 30 years easily saved me $10K or more (excluding investment returns). While spending the $1,000 to replace my water-damaged laptop was a bummer, it was a bargain when compared to my self-insurance savings!
Strategy: Many products come with manufacturer warranties (if they don’t I am wary, and I’ll look for a better product). In addition, I make purchases using a credit card that provides one year of extended coverage (and I get travel points), though I have never needed to make a claim. I protect my purchases, too, with physical forms of insurance–for example, I buy quality phone cases and screen covers and connect my home electronics to surge protectors.
Travel Insurance
I have found travel insurance to be the least useful insurance product for the cost. I purchased Amtrak tickets recently. With the company, I could pay $24 per ticket for non-refundable (my fault not Amtrak’s) or $26 per ticket for fully refundable and changeable tickets. While $2 doesn’t seem like much, that same rate of insurance for a $1,000 airline ticket would be $83! Then, I was offered to purchase trip insurance for $4.50 – even for the fully refundable tickets!
Most situations for travel delays like weather are covered by the airline or hotel. I have been on many flights that were delayed or cancelled and every time the airline has put me on another flight. On a trip to Hawaii, our whole family was delayed a full day and the airline paid for hotel, transportation, and food vouchers and we flew out the next day. Travel insurance wouldn’t have covered any lost wages from the delay. If a hotel can’t accommodate me, then I have always received my money back. Airlines are required to reimburse for lost luggage and in many situations for significant flight delays.
So, what if I can’t make the flight or get to the hotel? People often think travel insurance covers absolutely every risk you may encounter while traveling. It doesn’t. With all of the fine print and legal clauses, It is unusual to qualify for a travel insurance claim. For example, if I had a very specific risk, such as sudden need for cancer treatments, most travel insurance policies won’t cover the situation if it is a pre-existing medical condition. I had one friend who claimed on travel insurance during the COVID-19 pandemic. After an arduous claim process, the airline did reimburse her for the $580 discount ticket she purchased, but it didn’t pay for the $1,200 last minute replacement ticket she needed.
Strategy: I rarely purchase travel insurance. I mostly book accommodations with free cancellation (i.e. they often don’t charge extra to cancel). I use my travel credit card that provides travel insurance coverage to include rental car insurance coverage (I never buy rental car insurance coverage and I fill up before returning the car). I get 3x travel points and the same or better travel insurance coverage. In most cases where a travel change is out of my control (and often when it is), the airline, hotel, or other company will accommodate my change request. I have saved tens of thousands on cost avoidance from not buying travel insurance products!
Celebrating our smart travel insurance decisions
Home Insurance
Similar to my auto insurance, I carry a high deductible on the two houses I own (currently 1% of the house replacement value). I self-insure for minor damage (e.g., small roof repair) avoiding adding to my claim history (and increased insurance premiums). If I do have a major repair that well exceeds my deductible, then insurance will be there to cover it (as it should). Since owning houses since 2004 (two since 2008), I have saved approximately $300 per house per year and I have only paid one $2,500 deductible in that time and one $1,200 claimable roof repair out of pocket. That is a savings of over $11K (excluding investment returns).
Renters Insurance
I only purchase renter’s insurance when a landlord or umbrella insurance policy requires it, and then I purchase only the minimum required liability coverage. I self-insure for the rest.
Self-Insurance Is Cost Avoidance
While my large workforce of fire-fighting emergency fund dollars are invested in a low risk investment ready to handle my unforeseen emergency expenses, they are also doing great work saving me a ton of money through self-insurance. This cost avoidance has helped me achieve financial independence and early retirement. How is your insurance strategy helping you reach your goals?
My wife Launa has a new guest blog series at Reading Rockets about how children from different countries are taught to read. As we travel around the world, she and I are having a great time visiting local schools and talking to teachers about how children in their country learn to read. To be clear, I am just a sidekick along for the ride and taking advantage of this unique cultural exchange experience. We visit neighborhoods away from the tourist stream, see classrooms, and have deep conversations about education with teachers. When we started our full-time traveling life, Launa embarked on a book project about how children learn to read in other countries. This blog series is a snapshot each month of what she has discovered in different countries. Her first post was on Bulgaria, and her second was on Greece.
Reading Rockets website logo for Launa’s guest blog series
Even if you may not be into the details of how children learn to read, I think you will enjoy the insight in the day-to-day lives of the locals in the different places through the universal lens of education. A new post about a new country (Morocco is third) will be published each month. I hope you will follow-along the adventure.
Learn more about Launa and find links to her Learning to Read Around The World blog posts here.
Many thanks to Launa’s friend Rachael Worthington Walker for having Launa on her blog “Book Life” as a guest blogger. Rachael is a longtime champion of kids, books, and kids reading books!
Minimalism has had a profoundly positive impact on my life. I’m healthier and calmer, I have more time and flexibility with money, and I’m more content overall. In an effort to share why I have chosen a minimalist life and why it is so rewarding to me, here are my eight benefits of being a minimalist:
1. More Time to Focus on What I Value
Minimalism helped me focus on my highest priorities. By getting rid of the physical things from activities that were not my highest priorities (e.g., canning equipment, guitar and musical gear, biking gear, and old collections), I was able to shift the pieces of time spent on each of these lower-priority pursuits to my more important priorities. I now have more time to travel, be with family and friends, take care of myself, be outdoors, and follow my curiosity.
By pursuing these top priorities and letting go of the rest, I found I didn’t need 98% of my belongings and I became a different person in the process. The exact percentage isn’t important—the number will vary from person to person—but I think almost everyone’s personal belongings will significantly decrease when we focus on only those priorities that truly matter to us and let go of all the stuff belonging to lower priorities. Now I spend a lot less time researching, buying, repairing, cleaning, and disposing of stuff I don’t need. This provides me an enormous amount of time to do what I value most.
I also save time managing all that stuff. During my years as an active duty military member, I moved houses 13 times in 20 years. By my 5th move, I had 5 sets of heavy-duty metal shelving for garage or basement storage and 6 sets of tall plastic shelves for closets, utility rooms, and attic storage. Every move I would spend hours (days?) getting our 17,000 lbs of possessions stacked and stored. Many of the boxes I never even opened between moves, but often shuffled them around to reach other boxes. I would frequently open and dig through numerous boxes trying to find something I thought I had—wasting valuable time. When I got rid of all that stuff, I reclaimed my time.
More time for camping (Flathead Lake Montana)
2. More Money to Focus on What I Value
Similar to freeing up time to do what I value most, minimalism frees up thousands of dollars to invest or spend on the things I value most. Minimalism has freed me from the desire for more stuff to manage, clean, organize, and store. I no longer buy souvenirs or collectibles. I don’t buy new clothes for each season. I don’t buy in bulk or because an item is on sale. I also don’t need to buy storage bins, shelves, dressers, and the myriad of other things I used to organize and store all that stuff. Instead of spending money on the latest single-use kitchen gadget, electronic upgrade that I don’t need (or want), or containers to hold them, I redirect those monies toward charity, family and friends, travel, our early retirement, and the other experiences and hobbies I value the most.
3. More Physical and Mental Whitespace
My excess stuff added visual and mental noise to my life. My possessions demanded to be cleaned, fixed, maintained, used, and sold. Not only did my stuff take up my time and clutter my space, it also cluttered my mind with a constant stream of “shoulds”—a mental to-do list if you will. As I became a minimalist and decreased the amount of stuff I owned, I also freed myself from these numerous unwanted mental conversations. It was calming and mentally quieter.
With my few remaining possessions I had the mental conversations I did want to have. I can say yes more often to the books I want to read, yes to more travel, and yes to more quality time with family and friends. Likewise, by letting go of lower-priority commitments, I gained invaluable whitespace between my remaining activities—time to reflect, rest, and recharge.
I now dedicate a portion of time to doing nothing—to let my mind rest. Our brains need downtime to process all of the inputs that we feed it everyday. Having time to meditate, walk in nature, or just be is crucial to our mental well-being. I have learned to say yes to my health!
4. More Calm
Choosing to focus only on my top priorities freed my schedule. I no longer stress about getting from one activity to the next or having to choose between the multitude of tasks demanding to be completed. By letting go of our two cars, for example, I let go of my driving-induced stressed persona. I disliked who I became when driving in traffic—trying to will lights and other drivers to accommodate my tight schedule. It was stress I didn’t need. Now, when I do need to drive, I build in extra time, so I can mitigate many of the potential stressors of navigating the roads with my fellow humans. By reducing and focusing my commitments, I am able to build in extra time in my schedule that results in fewer activity conflicts, fewer tight transportation connections, far less stress, and much more calm
5. More Flexibility
Having less stuff means more flexibility to do what I want and live where I want. In my old life, I had to pass over several great rental houses because my family’s 17,000 lbs of stuff just wouldn’t fit. So I ended up with more expensive and less desirable houses. But now as a minimalist, I have increased flexibility and choices. I can easily move apartments if the rent is raised too high or the owner decides not to renew my lease. I don’t need a large moving van and crew of packers and movers to move my stuff. A minivan will do the trick if moving locally or a small low-cost self-loaded U-Haul box if I am moving farther.
This benefit is particularly useful as a full-time nomadic traveler. I only have a carry-on suitcase because I don’t need many clothes and I don’t want physical souvenirs. So I rarely pay for or deal with checked baggage. My backpack and suitcase are easy to carry on public transportation, up steps, or across bumpy terrain. They are easy to pack and unpack as we move from location to location.
As a minimalist, I easily adapt to the leanly-stocked short-stay accommodations. My apartment in Chiang Mai, Thailand, for example, only has two plates, two spoons, two forks, two wine glasses, two tumblers, etc. My wife and I don’t need more. I am content to wash these few dishes each day and enjoy the calm of the uncluttered space. Minimalism has increased my freedom.
We can easily move our remaining belongings at a moments notice
6. More Kindness to My Heirs
Every possession comes with an IOU. A future debt of time to care for and responsibly dispose of the item. Having a lot fewer possessions greatly reduces the workload shifted to your loved ones when you pass away. It took my wife and I many months to sell, donate, or otherwise responsibly dispose of our household of stuff. During that process we offered many things to our kids and other family members, only to discover that they wanted very little of what we owned. By pairing down our over 17,000 lbs of stuff, we have saved our kids the hard work of disposing of these items. We saved them time figuring out what was truly important in our lives. We also updated our wills and medical directives and let our kids know where our online possessions resided and how to access them. Pairing down now is both a gift to yourself while you are alive and a future gift to your heirs. We never know when our time on Earth will be up.
7. More Kindness to the Planet
In becoming a minimalist, I have realized that I don’t need or want a second (or third) set of dishes, a closet full of rarely worn clothes, or a bevy of decor items. Having less stuff, and using the little stuff I do have for its full useful life, uses fewer of our Earth’s limited resources. If I don’t take something off the store shelf (or purchase items much less frequently), then the company isn’t going to immediately obtain the natural resources and spend the energy to make a replacement item, package it in layers of cardboard and plastics, and refill the shelf space for the next customer. Having less is a gift for the planet, which in turn is a gift to ourselves, our kids, and our neighbors.
8. More Contentment
Minimalism has helped me recognize what is truly enough—enough money, enough stuff, enough commitments. I no longer pursue happiness. According to research, sixty percent of my happiness is out of my control. It is fleeting, and it places too much weight on what I own and do. I don’t need my bed, my food, my workout, or my clothes to make me happy. They just need to do their jobs. Instead, I pursue contentment in my simpler life. Contentment allows room for both the bliss and grief that are part of everyone’s experience. Recent examples in my own life include moments of bliss at my children’s college graduations and grief for my dad’s passing, but still being content. Always pursuing happiness can crowd out sadness, fear, and grief. I have more emotional flexibility and mental clarity when my goal is contentment. I can obtain a fully contented life because I have found enough.
I used to be a cyclist, gardener, canner, aspiring musician, soccer coach, coin collector, stamp collector, home owner, DIY handyman, and Department of Defense hospitality expert.
I am no longer those things. I found that by selling, giving away, or otherwise disposing of my guitars, soccer gear, biking gear, coin and stamp collections, work files, house, and many, many, other possessions related to these pursuits, I was freed from the personas that took away my time and focus from the things that I wanted to be and do the most.
In his time management book Four Thousand Weeks: Time Management for Mortals, Oliver Burkman challenges us to focus on our top priorities. He shares a story attributed to Warren Buffet, in which the billionaire advises us to make a list of our top 25 priorities, then focus on the top 5 only, actively avoiding the remaining 20 items. Those items prevent us from spending the time needed to do our highest priorities very well.
Burkman himself is not this prescriptive. He explains, “You needn’t embrace the specific practice of listing out your goals (I don’t, personally) to appreciate the underlying point, which is that in a world of too many big rocks, it’s the moderately appealing ones—the fairly interesting job opportunity, the semi-enjoyable friendship—on which a finite life can come to grief.”
This concept was an eye-opening revelation for me. In order to focus on what I wanted to be and do the most, I needed to eliminate my lower priorities. In my case, that meant retiring my many appealing personas listed above, and focusing on the ones that are core for me: husband, father, friend, traveler, camper/hiker, personal finance coach, and lifelong student. Since one of my top priorities was to travel the world nomadically with just a carry-on and a backpack, I needed to do some major downsizing. I fully embraced minimalism with some surprising results.
But this downsizing is a lot easier said than done. For me, it was a long process. I truly enjoyed learning to play an instrument, gardening, and coaching soccer. To give up the things that went along with those pursuits wasn’t just getting rid of stuff I no longer valued. I was giving up valuable, but lower priority, pursuits that were preventing me from fully doing what I valued the most.
The hardest things for me to let go of were my electric guitar, amp, and case, the accessories of my dream of learning to play the guitar. I had wanted to play classic rock tunes around a campfire. On two separate occasions, I took weekly lessons for months on end. I practiced a lot, though not enough, since my identity as a musician wasn’t one of my top pursuits (and it had so much competition from my other middling-priority identities). During my second set of lessons, I spent over a $1,000 upgrading my $80 acoustic guitar for a new electric guitar and amp, thinking better equipment would help me learn quicker (it didn’t). I made small progress but not really enough to be satisfying.
After I stopped taking lessons and practicing, the new guitar remained a constant guilty reminder of the time and money I had sunk into learning to play. When I sold my (lightly used) electric guitar, amp, and case back to the music store I bought it from (at a fraction of the price), I felt free! I was giving myself permission to no longer strive to be a musician. I no longer had this physical reminder scolding me “You should practice music. Remember, it is the seventh most important thing you want to accomplish!” It was a conversation with stuff that I didn’t want to have any more.
The time and money I spent trying to learn to play the guitar took time away from what I really wanted to do—read, travel, learn a language, and take better care of myself. Likewise, by getting rid of my canning equipment, lawn care equipment, tools, old files, old collections, job (I retired early), cars, and house, I released myself from numerous commitments and freed up enormous time and resources.
Because camping is one of my top priorities, I kept my camping gear (tent, sleeping bags, inflatable mattress, and cookware) neatly stored in my friend’s basement near Seattle. These possessions support my top values as each summer I return to the beautiful Pacific Northwest and enjoy weeks of camping among the evergreens.
Enjoying our camping gear
Each person’s top priorities will likely be much different than mine, and of course top priorities can certainly change over time. When my life of traveling winds down, I may decide to return to a house and gardening or maybe pick up the harmonica.
It’s a useful exercise to distinguish your most important pursuits from the lower priority pursuits getting in your way. You may decide that learning a musical instrument is your top priority, so you’ll get that dusty guitar out of the basement and give it pride of place (and time and money) in your newly cleaned living space. You might ditch the tent that I decided to keep. The key is to hone in on your own top priorities, keep the few items that help you in those limited pursuits, and discard all the possessions that are part of lower-priority pursuits.
Having newfound time and resources to focus on world traveling, my relationships, reading, sleeping, stretching, and hiking has been amazing. I have traveled more this year (2024) than any other year. I have read more books this year than any other, including my years in college. I have spent more meaningful hours with my close family and friends than I had before embracing minimalism, because I had a clearer focus on why they were important to me. I walk and hike more than ever. I am constantly learning new things and tackling my foreign language proficiency goal.
I have swapped the elusive pursuit of happiness with the pursuit of contentment because I found that “enough” is fulfilling—enough in what I have, enough in what I do, and enough in who I am.
Doing fewer things better is…better! Removing the physical possessions around these lower-priority identities made it happen. By getting rid of these possessions, I gave myself permission to focus on the core of who I really wanted to be. Minimalism changed who I was.
[This was first published on the minimalism and lifestyle blog No Sidebar.]
My wife and I sold or gave away 98 percent of our belongings which enabled us to achieve our goal to become full-time nomadic travelers in July 2023. In my pursuit of a simpler life with fewer things, I had to ask myself tough questions. I needed to––I was a self-described “collector of collections” and had a lot of stuff when I started this journey.
Asking myself the popular question about whether something sparked joy didn’t work for me. I found it too easy to confuse any “joy” I felt for a possession with the fleeting enjoyment of a shiny new object––that proverbial “new car smell.” Sometimes I needed to get rid of something even if I really liked it. On the other hand, important possessions I used everyday didn’t spark joy and they didn’t need to. They just needed to do their jobs.
Instead, I found that I needed to ask myself different questions depending on the item in my hands. Six tough questions helped me identify what I wanted to change in myself in relation to what I owned. When I took the time to reach my answer, I changed my relationship with each item, freeing myself to make clear-minded decisions whether to keep or let go.
1. Do my emotions connected to this item exist only because I possess it?
Many of my possessions had sentimental value. For example, love letters from dating my wife 37 years ago, awards I received during my military career, keepsakes given to me from relatives, and a lifetime of collectibles all carried emotional weight. But I found that the feelings were independent of the items––they existed in me. I could feel the achievement of my military career without keeping the physical awards and the nostalgia for dating my wife without all the letters. I found taking a few quality photos helped me detach the emotions from the physical items.
Photo reminder of some hard-to-get coins awarded to me during my military career
2. Do my family and friends really care if I let go of this thing they gave me?
When my wife and I were first married, her parents gave us the family’s upright piano, the one her great-grandmother danced around in delight when her great-grandfather brought it home in the 1930s. As a military family, we moved that 600-pound piece of musical furniture to 14 different houses. It didn’t fit in our lives, but it had the weight of family expectations––we were the keepers of a family heirloom. When we finally gave it away, we didn’t give away our memory of and love for her great-grandmother, and we didn’t lose the love of our family. I discovered that my family and friends weren’t nearly as disappointed (usually not at all) as I believed they would be when I let go of something they had given me. My guilt was self-imposed.
3. If I let go of these excess clothes, do I care if people see me wear the same clothes on a frequent basis?
Subconsciously, I used to care a lot. I let marketing companies and the middle-school fashionistas of my past impact my adult behavior. Once I realized that it was really me enforcing their rules on what I should wear, I freed myself to wear what I wanted––a few functional, durable clothes. My colors are mostly gray (my daughter lovingly calls it my “groutfit”) and I’m sure I look the same in every photo, but my clothes now reflect my values and take up a lot less space.
Wearing my “groutfit” as I travel (Prambanan Temple, Indonesia)
4. Is this possession an investment or an expense?
I held the notion that many of the items I collected over the years were investments and would be worth a lot of money someday. I felt that I had to keep them until I got my perceived value for them. As I downsized, I learned in most cases my possessions were not worth what I thought they were, both in dollars and in my effort to get that money. My stamp collection (couldn’t find a buyer), coin collection (sold most for melt value), Seinfeld DVD set (garage sale price), electric guitar (sold at 40% of retail), autographed Wedgewood vase (gave to charity), Irish Belleek china (garage sale), and more were not worth even close to what was paid for them, and it would take a lot of my valuable time to get more than dimes on the dollar.
5. Can I borrow or rent this item instead of owning it?
I enjoyed collecting a fairly large bookshelf full of books, but came to realize that there are very few books––physical, digital, or audio––that I can’t get from my excellent local public library. When I need them, I can rent tools, a bicycle, a car, and a suit. And if I ever miss the sight of my old collectibles (I haven’t yet), I can visit stamp or coin shops, antique stores, and museums any time and see more wonderful collections than I ever had.
6. How do I handle new items that come to my doorstep?
Once I used the five questions above to let go of all my excess possessions, there was one more important question I needed to maintain my newfound freedom: how do I keep new stuff out? Do I add them to my inventory of items to manage? Having dealt with decades of the “collect-purge-collect-purge” cycle, sustainable change began when I stopped collecting in the first place. I stopped shopping. Oh, I still buy an item like a shirt or shoes when I really need it, but shopping as entertainment is no longer part of my life. I politely let relatives and friends know I value experiences (eating out, visiting a museum, and travel) and consumables (homemade cookies or a bottle of craft gin) over physical possessions. For gifts that I can’t dissuade someone from giving, I find a new home for it and don’t let it become a part of my life.
The answers to my 6 tough questions changed my relationship with the things I owned and was the start of a newfound freedom. I encourage someone starting this journey to find the questions that work best for you. Asking yourself tough questions to identify the underlying internal and external forces behind why you have what you have will help you hone your values and discard items that are not in alignment with those values.
Before I embraced minimalism, I loved to go camping. In the woods I noticed how quiet my mind was. It wasn’t just bathing in the trees that was calming. I enjoyed not being reminded by my multitude of belongings of the many chores I needed to get done at home. Similarly, when I was in a hotel for a few days, I didn’t have mental conversations with the items in the room. The wallpaper with the lifting seam, the fake floral arrangement that needed dusting, or the floor tiles with the marks were not talking to me. They had someone else to bother. But before minimalism, my stuff at home was not so quiet.
Each time I walked past our silver bowl on our living room bookcase shelf it talked to me. It nagged “You should polish me, I don’t look good tarnished.” and I’d say, “OK, but I’m busy now, maybe next time.” My car would demand “you should wash me” or “change my oil.” My guitar reminded me “You should play me,” or “I will get out of tune and you will lose your callouses that you worked so hard to acquire.” My stamp collection scolded me, “Being packed in this box could damage the stamps.” My canning equipment asked me “When will you can some more jalapeños? Am I just taking up space over here?”
Throughout my house, my stuff was engaging me in “conversations.” Some of them I liked. My favorite book whispered, “you will love the next chapter,” but I told it I’m too busy because I should change the oil in the car, or polish that damn bowl, or play the guitar, or clean the shed, or dust, fix, or organize all of my other things. Most of the conversations I didn’t like. I constantly “should-ed” on myself due to my self-imposed guilt from everything my stuff demanded I do.
Not only did my stuff take up my time and clutter my space, it cluttered my mind with a barrage of “talk.” As I underwent a metamorphosis to become a minimalist and decreased the amount of stuff I owned, I also freed myself from these innumerable mental conversations. It was calming.
By prioritizing what I valued most and letting go of the rest, I found I didn’t need the guitar in my life, or the canning equipment, or the stamp collection, and I certainly didn’t need the silver bowl. They didn’t support my top values of traveling the world, spending more quality time with family and friends, improving my health, learning a language, and following my curiosity. So I let them go and made physical and mental space to focus on the mental conversations I did want to have. I say yes more often to the books I want to read, yes to visiting the Sahara and Angkor Wat, and yes to more quality time with my mom (my dad passed away last year).
By following my top values and letting go of the rest, I found I didn’t need 98% of my belongings (your amount will vary). I spend a lot less time researching, buying, organizing, storing, repairing, cleaning, and disposing of stuff I don’t need. This provides me an enormous amount of time to do what I value. I also have time to do nothing—to let my mind rest. Our brains need downtime to process all of the inputs that we feed it everyday. Having time to meditate, walk in nature, or just be is crucial to our mental well-being. Now I say yes to my health.
My house is much quieter now. My mind is much quieter now. I am more content.
Minimalism changed my life for the better. Minimalism at its core is focusing on what we truly value and eliminating the rest. There is not a definitive number of things a person should own to be a minimalist, and making minimalism a comparison game defeats one of its key purposes.
While the concept has grown in popularity over the last 15 years or more, I found it difficult to discern the core concepts from the many voices pushing different interpretations. I continually found the term misused, misunderstood, and co-opted to sell us more stuff or get more likes on social media posts.
The following are five habits that do not align with a minimalist life, even though they can be very good at posing as the real thing. They should not be confused with the life-changing power of minimalism.
Stopping just short of hoarding. If someone has a true hoarder in their lives, then a huge number of possessions can appear minimal in comparison. It’s probably obvious, but worth stating: simply not being a hoarder does not make me a minimalist. Getting rid of just enough stuff to avoid being a hoarder does not make me a minimalist. If we feel that we don’t have a problem to solve because hoarding is our comparison point, then we need a new reference point: a home free of everything that isn’t aligned with our values.
Being great at organizing a lot of stuff. Buying shelving, cabinets, bins, and other “organization” supplies so I can neatly store thousands of pounds of stuff in closets, attics, sheds, furniture, and basements does not make me a minimalist, even if my friends tell me my house looks tidy. I used to get that compliment often—I was a master at storage and organization. But that stuff, even if neatly arranged, was a burden on me. I had too much. Storing it neatly wasn’t the answer—getting rid of it was.
Embracing a “minimalist” designer’s style. Replacing my old stuff with new, sleek, white-palleted decor, or putting pasta, cereal, and dried beans in new matching glass containers that look Instagram-worthy does not make me a minimalist. Buying a designer paperweight from Marie Kando’s online store won’t make me a minimalist (but it will likely spark joy in her wallet). Being a minimalist is not about meticulously arranging my clothes in my closet from biggest to smallest, or by thickness of fabric (as Marie Kando suggests), or any other time-consuming design arrangement. If my effort to arrange my stuff is worthy of a social media post, then I am missing a key point of minimalism—simplicity.
Decluttering every year. If I need to declutter every year because there is a perpetual influx of new things in my life, then I am not a minimalist. I’m not talking about getting rid of my few worn out or broken items or some gifts from well-meaning relatives—I’m talking about remaining in a cycle of consuming, in which I regularly purge things just to create space for more purchases. For decades, every 6 to 12 months I found myself cleaning out the garage (or the shed, or my closet, or the basement) and driving a car load to donate at the local charity, and every 3-4 years I had a yard sale. Because I had not addressed my problem with collecting more stuff after each purge, I was doomed to repeat the collect-purge cycle. While it always felt great to get rid of that carload or sell that stuff in my yard sale, those purges did not make me a minimalist.
Confusing the allure of newness with my true values. New stuff has an allure (a spark of joy?) that is often confused with our true need to have something which honestly supports our top endeavors. My temporary desire, often fueled by societal pressures, to have the latest cooking gadget or electronics upgrade and the fleeting joy that purchase brings should not be confused with truly aligning my possessions with my values.
All of these habits have one thing in common—continued accumulation of more stuff, regardless of how much we dispose. By separating the minimalism wheat (intentionality and contentment) from the chaff (creating a certain “look” and endless organizing), I hope the benefits of real minimalism will be easier to find.
My wife and I sold or gave away 98 percent of our belongings. Our dream to be full-time nomadic travelers took flight in July 2023––a goal we never thought possible until we fully embraced minimalism.
In her popular book The Life-Changing Magic of Tidying Up: The Japanese Art of Decluttering and Organizing Marie Kondo is adamant that a successful minimalist life only can be achieved if a person does the decluttering all at once and not a little at a time. My experience was the opposite.
My metamorphosis from a self-described “collector of collections” to a minimalist took over three years to achieve through several stages. Small incremental reductions of what I owned, in turn, resulted in small but noticeable increases of freedom and control in my life. In fact, it changed who I was. While a caterpillar physically changes, I evolved internally, honing my values and perspectives.
Lucky Lager puzzle bottle caps from the late ’70s — one of my many collections
Like a caterpillar becoming a butterfly, I progressed through four stages to become a minimalist.
Each stage motivated me to make further (and often bigger) reductions in possessions and commitments resulting in increased white space and contentment in my life. A virtuous cycle.
Egg Stage: Start small, but discard enough to notice (and then notice!).
I started with the low-hanging fruit––I culled my closet, shoes, and some books. I disposed of enough to notice the freed up space. My drawers closed easier, my hangers had elbow room, and my shelves could breathe a little. It felt great and a little freeing to take a car load of boxes and bags to the nearby donation center.
Noticing how great this felt, I was motivated to do more. I went after our basement and attic storage areas––they were full of large plastic bins and boxes neatly stacked on shelves or in rows (reflecting years of storage management efforts). Again, I didn’t do it all at once, but I culled enough so that the empty boxes, bins, and shelf space after each round would continue to motivate me.
Decluttering enough to notice — I had spent decades buying bins and shelves to hold more stuff
In this “egg” stage, I passed over the vast majority of my possessions because they either had sentimental value (awards and keepsakes), emotional value (gifts and family heirlooms), functional value (tools, supplies, clothes), perceived rarity (collectibles), or perceived monetary value. At the end of this stage, my past self would have stopped––some culling and a car load or two of donations, creating some temporary space until the clutter returned. But this time I used the momentum from this stage as the start of true change.
Larvae Stage: Devour knowledge about minimalism and keep iterating.
Before I could tackle the “harder” possessions, I needed to learn more about the benefits of minimalism and gain tried-and-true techniques that worked for me. I read several books and blogs, listened to podcasts, and watched YouTube videos taking in many different perspectives on achieving a better life through minimalism.
There are many different approaches to minimalism. While I gleaned some valuable ideas from most of them, Fumio Sasaki’s book Goodbye, Things: The New Japanese Minimalism resonated most with me. This book provides specific techniques for minimizing every type of possession. While I found he went a bit further than I did in my downsizing, I appreciated his thorough approach to the subject.
Finding the right voices that teach and inspire you is an important step in advancing your minimalism skills. I felt stronger knowing there is a supportive community and that I wasn’t alone in wanting the benefits of owning far fewer possessions than most citizens of developed countries.
As I learned new techniques and challenged my mindset, I iteratively returned to my closets, drawers, shelves, and storage with a fresh perspective and continued to make progress.
Pupa Stage: Ask yourself tough questions and let the answers change you.
As I advanced in my pursuit of a simpler life with fewer things, I needed to ask myself tough questions about who I was, what was important to me, how I let external pressures drive my internal decisions, and what were my expectations of the things I owned.
Asking myself Marie Kondo’s famous question about whether something sparked joy didn’t work for me. I found it too easy to confuse any “joy” I felt for a possession with the fleeting enjoyment of a shiny new object––that proverbial “new car smell.” Sometimes I needed to get rid of something even if I really liked it. On the other hand, important possessions I used everyday didn’t spark joy and they didn’t need to. They just needed to do their jobs.
Instead, I found that I needed to ask myself different questions depending on the item in my hands. The six tough questions below helped me identify what I wanted to change in myself in relation to what I owned.
Do my emotions connected to this item exist only because I possess it?
Do my family and friends really care if I let go of this thing they gave me?
If I let go of these excess clothes, do I care if people see me wear the same clothes on a frequent basis?
Is this possession an investment or an expense?
Can I borrow or rent this item instead of owning it?
How do I handle new items that come to my doorstep?
This photo is all I need to relive the joy of meeting Warren Miller and watching his ski movies as he narrated them
These questions exposed my underlying beliefs, emotions, and societal pressures I attached (often subconsciously) to my possessions and impeded my ability to let them go. The answers to my 6 tough questions helped me change my relationship with the things I owned, freeing myself to make clear-minded decisions whether to keep or let go, and was the start of a newfound freedom.
I encourage someone on this journey to find the questions that work best for you. Asking yourself tough questions about your possessions to identify the underlying internal and external forces behind why you have what you have will help you hone your values and discard items that are not in alignment with those values.
Adult Stage: Ready to fly
I became a minimalist long before I pared down to the amount that I needed to meet my nomadic travel goal. My mindset and values completed their metamorphosis about 8 months before my belongings and commitments reflected that change.
Getting rid of a lifetime of possessions in a responsible way (selling, recycling, re-homing, donating, etc.) takes a lot of time.
The upper side of our major “everything-must-go” yard sale
For example, my wife and I culled, scanned, and then disposed of all physical photos except our small wedding album. It took days of hard work, but we are now enjoying the fruits of this labor by having immediate searchable access to over 7,000 photos. We enjoy and share these old photos far more than we ever did when they were stored in albums and boxes in the basement.
The lower side of our major “everything-must-go” yard sale
It was at this stage where I was able to tackle the hardest downsizing as I had the mental tools and fully understood my values in regards to my possessions. The emotional, sentimental, societal, and other belief barriers were no longer preventing me from taking action. Taking nicely laid out photos of keepsakes, awards, our kids school artwork, and other emotional and sentimental items (e.g., my bottle cap collection and autographed Warren Miller program) helped ensure I retained a record of the memories that these items represent and why I was keeping them. Looking at these and our other photos helps me reap a bigger memory dividend––the best return on investment we can achieve in life.
My wife and I completed our downsizing in July 2023, and now we travel the world full-time with a backpack and a carry-on each. My wife Launa shares poignant observations from our travels on her blog at Launa At Large where you can sign up for her thought-provoking electronic postcards. We love our freedom and the calming white space that minimalism has brought to our lives.
Ready for full-time travel with a carry-on and a backpack
I frequently hear on Financial Independence and Retire Early (FIRE) podcasts and read in FIRE blogs that the RE (Retire Early) part of the FIRE acronym should be dropped. They can’t imagine not working, they say, and besides, they enjoy working.
I know what they mean. I had my dream job, and I worked it even after I achieved full FIRE. I had quit my career of 29 years in retail and hospitality management, and then I found the perfect job that I loved doing—educating military service members on personal finance. Despite my dream job having everything I wanted, I quit it just one year later.
And, if you’ve reached FIRE, I think you should quit your dream job, too.
What? Quit you say? Then it couldn’t have been your actual dream job, right? Wrong.
This was my dream job! It had it all: an important mission educating military service members on personal finance, a kind and supportive boss, great co-workers, practically unlimited resources, lots of autonomy, great pay and benefits, no supervisor responsibilities, and the ability to telework as much or as little as I wanted.
Logo for the office of my dream job (I linked it to the FINRED website)
It was the perfect job for me! So why did I quit?
In a nutshell, we have finite lives. As much as I valued this job, it wasn’t the number one thing I wanted to do AND it was physically and mentally keeping me from doing the things that I valued more.
My top five things I wanted to do were: travel, improve my health (walk and hike more in particular), spend more quality time with friends and family, follow my curiosity (to include learning a language), and read more books. It turned out that the sixth thing I wanted to do was help people improve their personal finances—my dream job.
What We Tell Ourselves About How It Is Going To Be
When I applied for the job, I made a bargain with myself that I would only work the required 40 hours a week. I committed to not work any extra hours or sit endlessly at a desk—a way of life that had plagued me throughout my working life.
I promised myself that I would use my free time to do those top five things I wanted to do. Since I had limited time off (4 weeks per year), I planned to jet-set off with my wife on the weekends to visit family and see new places.
To work on my health, I bought a new standing desk, new ergonomic chair, headset, and a variety of other office items to make my home office as comfortable as possible (I had a dedicated room upstairs with two nice windows). After work, I planned to walk every day and do my daily stretching and body-weight exercises. Also I would read more, study my Spanish, and spend more time with family and friends. It was going to be great!
Since I didn’t need the money (I was fully FIRE), I committed to spending the extra $125K+ a year after taxes on travel and things that would make life easier, such as housekeeping, lawn care, and eating out, so I could maximize my time off.
So how did I do that year in my dream job, achieving the things that I wanted most in life? The reality was a lot different than what I planned.
Even My Dream Job Didn’t Fit Neatly into Working Hours
I often worked extra hours despite my promise not to. At first, my justification to myself was that I needed to get up to speed on the new job. But after a couple of months, that justification morphed into a desire to accomplish a lot (and I did!).
I’ve known for some that when I make a commitment to others, I place that higher than commitments I make to myself. This year of work after I reached FIRE reaffirmed that understanding. Work severely limited my ability to engage in my higher priorities. I didn’t need more money – I needed time.
Traveling to Asia and having the time to visit the minor temple sights in Cambodia wouldn’t happen if I was working full time
Lots of Travel, But Little Decompression
I took many weekend trips that year. We often left on Friday nights and returned Sunday evenings (or Monday evening if it was a holiday). The fun weekend destinations included New Orleans (once with my wife and once for an NFL game with a friend), Phoenix (to see relatives), Miami (Formula One Grand Prix with a friend), Puerto Rico (for my birthday), rural Virginia (for CampFI Mid-Atlantic), Charleston (for our anniversary), and Thomas, West Virginia (for great bluegrass music).
I also took longer trips: 4 days in Minneapolis for a family reunion, 8 days in Newfoundland with my son, 10 days hiking Hadrian’s Wall in England, and about 10 days hosting our two adult kids over Christmas, though I worked several of those days.
While all of this travel may sound great, I found it to be tiring. There was no downtime between work and travel. On those weekends when I wasn’t traveling, I was researching and booking my airline, hotel, transportation, and excursions. Travel planning takes time.
Because I only had a couple days at each location, I found myself scurrying around when I got there, trying to maximize the visit (the way most Americans go on vacation). I was also traveling when everyone else did (weekends and holidays) and fighting crowds as a result.
My time off was limited by my work, and although I had a generous 4 weeks of paid time off each year, it wasn’t nearly enough. My higher priority to travel and follow my curiosity was being hampered by my dream job.
Did My Health Improve?
No. My sleep was hit or miss as it was often interrupted when I had an important upcoming meeting or project due—I couldn’t turn my mind off easily. Having a job that I cared a lot about was difficult to turn off when I closed my laptop.
Even with the new high-end standing desk, I sat for most of the day. I did get out for a walk most evenings before dinner, but I had difficulty fitting in my stretching and body-weight exercises as work started early. I was no longer biking with my friends on the weekends—it just didn’t fit.
Hiked 10,000 foot peak in Vietnam. Not working enables lots of hiking, walking and biking in my days.
Did I Find More Quality Time With My Family and Friends?
No. While I did make some trips to visit family, they were limited by my time off (which was split between seeing new places and seeing family) and similar to my sightseeing, it was harried and less quality. I was seeing my family and friends about the same as I did before I reached FIRE—not enough.
What About My Priorities of More Reading and Learning a Language?
Because I was so engrossed in the important work of my job, I was mentally exhausted at the end of most days. My best creativity and concentration were focused on better reaching military service members with quality personal financial information. After work I didn’t have the mental energy to read the books I wanted to, or focus on improving my Spanish—I found I needed to spend much of my free time mentally decompressing from work.
Relaxing and reading on my porch in Luang Prabang, Laos.
Since Quitting My Dream Job
After quitting my dream job, my wife and I fully embraced minimalism. We sold or gave away 98% of our belongings, turned our house into a long-term rental, and became full-time nomadic travelers with a backpack and a carry-on each. That change has been deeply valuable to us, and it took time–time I simply didn’t have when I was working my dream job.
But here is where I really saw the effects of quitting. This comparison chart shows my time (counted in quality days) spent with friends, family and traveling during my year of working my dream job vs. my first year after quitting my dream job.
Friends
Family
Travel
Total
Year During Dream Job
13
45
23
81
Year After Dream Job
43
130
178
351
Quality Days Spent on Three of my Top Five Priorities. Note: some days overlapped with family or friends on vacation, so I chose what the primary purpose was for each day listed to avoid double counting. It doesn’t add up to 365 because there were about 14 quiet days that didn’t neatly fall into any category, so I left them out of this tally.
By letting go of my sixth priority (my dream job) I have been able to fully achieve my top five.
I traveled more than in my previous 13 years combined.
I read more books than any year, to include college.
I spent more time on my health than I had in decades.
I spent 3.5 months practicing my Spanish to include in-person classes and daily app learning.
I spent 3x more quality time with family and many friends.
Even if you have your dream job, that isn’t necessarily reason enough to keep working after achieving FIRE. I recommend that after some soul searching you ask yourself: “Is this job truly my top priority in my life and with my time?” If it isn’t, then ask yourself “Does this job hamper my higher priorities in any way?”
If your answer is yes, and your dream job prevents you from fully doing any of your higher priorities, it is time to quit.
(Originally published Feb 1, 2023. Revised—substantial edits in italics) The FIRE community talks a lot about the rent vs. buy discussion. Which is the optimal financial decision for your personal housing and how to calculate that? While there is great information out there to help you decide, I see two important considerations often left out of these discussion:
(1) Many compare a short horizon for buying a house with a long horizon for investment of down-payment funds by renters (opportunity cost). A long-term horizon should be used for both.
(2) Many overlook the long-term impact of inflation on this financial calculation.
If you treat your personal home as an investment (for example, avoid unnecessary house upgrades and be willing to rent out your home if you need to live elsewhere for a while) and use the same long-term buy-and-hold strategy that an index-fund investor uses (a 10 to 30-year horizon that smooths over the ups and downs), then buying a home for your personal use (in other words renting to yourself) is often a good investment––especially due to the power of inflation.
The pendulum has swung on this topic. For years, the common advice was that “renting is throwing your money away” and “your house is your biggest investment.” In response, many prominent articles, blogs, videos, and podcasts have weighed in on this decision arguing the wisdom of renting. These include:
While each of these pieces have great information, they didn’t fully include the power of inflation over time for both increased rent prices and the inflation-hedge of a fixed-rate mortgage. The one exception is the NYT calculator. It did include inflation, but it did not appear to weigh inflation appropriately if you own your house over a long period (based on my testing of the calculator parameters). I believe that omission misconstrues a key part of the Rent vs. Buy financial evaluation.
This post is responding primarily to the first article by JL Collins and uses JL’s comparison formula as a starting point.
Why does Inflation Matter?
(1) Because rents generally increase over the long-term, but fixed-rate mortgage payments (P&I portion) stay fixed. And (2) while the value of a home rises slower than the stock market index, that smaller increase is for the entire value of the home—not just the down payment and other accrued principal. For example, $100,000 in the stock market getting say a 12% avg annual return is the same as a 3% return on a home valued at $500,000 with a 20% down payment of $100,000—both gain $12,000 in value the first year (excluding taxes on those gains).
We have seen recently how the increase in inflation and increased demand for remote work have generally increased home prices across the nation. Rents have also dramatically increased. One article indicates the U.S. medium rent amount has increased by an average 8.85% per year since 1980 (although not in either of the two areas I own homes). But even in times of lower inflation, house prices and rents tend to rise over time. In recent memory, only 2010 gave the U.S. real estate market a very short period of rent deflation.
So the longer you hold your low fixed-rate mortgage property (assuming you refinanced at the historically low rates between 2012-2021 time frame), the greater benefit you will have from inflation as the majority of your house payment will stay the same over time. The amount you would pay in rent would increase over that same period. To illustrate below are a couple of examples from my own experience below.
But first, a couple of caveats and assumptions:
Real estate is local. I use a Midwest example and an east coast example.
I’m not asserting that buying a house is the BEST possible investment. I contend that it can be a GOOD investment (part of a diversified investment portfolio) and often better financially than renting a comparable house when all numbers are considered.
I assume you’re familiar with investment returns and other general financial concepts, so I’m not getting into lengthy explanations here.
My buy-and-hold strategy for houses means that if I decide (or am forced) to move I will rent the house until I can return—I won’t sell. Selling a home too soon changes the calculations and makes buying less likely to win the financial comparison.
If I do need to rent my house, I do not hire a property manager (more on this below).
I ignore renter’s insurance. I agree with Jeremy at Go Curry Cracker that I can self-insure. If you can’t (many landlords require it) or don’t wish to self-insure, add that cost to renting.
Running The Numbers
I fully agree with JL that the key is to run the numbers for your specific situation and not assume one choice is automatically better than the other. However, JL’s example (and formula) appears to undervalue inflation benefits over time for principal and interest. For example, in his blog post comments he equates rent inflation increases to be equal with inflation increases in property taxes, insurance, and maintenance and thus offset each other. However, my data indicates otherwise because the majority of the mortgage payment is P&I which remains the same over time.
Also JL provides a very high repair, maintenance, and insurance cost of $7000 average per year (in 2012 and prior). National averages for repair and maintenance are approximately $3,000 per year and insurance certainly doesn’t cost $4,000 (EDIT: except maybe in parts of Florida (see note at bottom) and other flood prone locations where I wouldn’t buy anyway. There can be foolish investments in real estate the same as the stock market. Also, my insurance bill in 2024 was $1,145 on a $1M home in Va and $1,108 on a $400K home in OH—less than 2023). My records for the two houses I own show a much lower average for maintenance and repair costs. The breakdown for each is as follows:
For my large Ohio house, even after reroofing ($13K); completing a $3500 tree trimming; replacing the fridge, dishwasher, air conditioner, furnace, garage door opener, new bathroom floor, and decking (Trex composite); having the whole interior repainted professionally and completing numerous other small repairs and maintenance, I have averaged $3,784 per year over 13.5 years. I expect this average to go down now that I have upgraded the primary systems, and when I add insurance, it increases to $4,548 average per year—still significantly less than JL’s $7K figure.
My home in Virginia has cost me much less in maintenance and repair ($1635 per year for 10 years). In part because I enjoy doing a lot of repairs and maintenance myself, but primarily it’s because I’ve had fewer major system replacements (I did paint the interior, re-roof, replace the gas lines, install new windows, and replace the stove). (EDIT: For my calculations I used the national average of $3,000 and deflated it back through time, so it is higher than what I actually paid to account for my personal time invested.). See note at bottom on the cost of time and effort as a renter that most people ignore.
So, while I had a couple of expensive years with repairs and maintenance for both houses (especially those new roofs), the key is that these costs even out over time IF you hold onto your house. Those roof shingles usually need replacing only once every 30 years. (EDIT: Look for a house with newer systems AND don’t sell your house soon after making major repairs like a new roof—that is just handing value to the buyer that is likely not in the selling price)
I did not include any costs for upgrades (EDIT: I treat my house like a rental–I am the renter AND the landlord. If I wouldn’t pay for an upgrade for other renters, then I am not paying for it for myself). I find most upgrades (such as an upgraded bathroom or basement renovation) tend to be net financial losers as they rarely return full value for the cost in increased home value, especially when you look at opportunity costs of using that money elsewhere.
Similar to JL’s buy-and-hold strategy for stocks, we need to buy-and-hold when we buy a house. Just as you should hold your stocks for 10+ years, hold your house for 10+ years or more to get the long-term investment returns and most benefit from inflation. (EDIT: I made back my investment long before 10 years as you see in the results below, but this is the mindset that is needed to ensure a long-enough runway to win out over renting in most markets or mortgage interest rates)
These returns get better with each year as the mortgage payment typically grows at a much slower rate than rents do and homes tend to increase in value—on average around 3.5% to 3.8% per year.
Again, real estate is local. My home in Arlington, VA has increased in value by ~48% since 2013 (avg 4.6% per year) while my home in Dayton, OH has increased ~37% since 2009 (avg 2.4% per year). But I am not selling either house any time soon as I am enjoying how inflation is my friend in both markets.
Apples to Apples
JL compared his large house he owned to a small apartment he planned to rent when he was downsizing. As he states in his comments, he did an apples to oranges comparison. But an apples to apples comparison may be more relatable for many people looking to make a buy vs. rent decision between two comparable houses.
When my wife and I went from being a couple to having a family, we shifted from an apartment to a house. We wanted the larger space, the yard for the kids, and the good schools that often come with SFH neighborhoods. We knew where we wanted to live and the size of the home we wanted—we just needed to decide if we should buy or rent that house.
So instead of comparing the rent for a small apartment to rent for a family-sized home as JL did, I believe comparing renting a 3+ bedroom/2 bath home to buying a 3+ bedroom/2 bath home is a more common situation when considering whether to rent or buy in a particular location. So in his example, renting vs. buying comparable apartments.
In Arlington, VA in 2013, rent for a comparable house to the one we bought would have been $3,400 per month while our mortgage house payment was $2783 (3.25% interest). Our first month’s principal of that payment was only $857. Since principal increases a little every month, I use the mid-year monthly numbers when calculating the annual amounts to track the opportunity costs.
Getting to the Math
To make the financial comparison, JL’s basic formula is:
Opportunity cost (equity * annual investment return %). [Note: JL used VGSLX because he would otherwise invest in real estate. This number needs to be lowered for taxes (JL’s formula did not appear to do that)].
+ Total annual cash expenses which comes from adding up these annual outlays:
Maintenance & repair & insurance
Real estate taxes
Mortgage interest (note: excludes principal)
Subtract tax deduction savings
Total annual cost of owning and operating the home = Opportunity Cost + Total expenses.
Subtract annual rent to get annual premium (or savings) to live in the house FOR a single year.
JL’s formula doesn’t appear to factor in inflation over time. I have created a spreadsheet (see images below) using the detailed numbers for my Virginia and Ohio homes over time to indicate that, early on, renting is likely better (depending on your investment return and inflation variables). But, over the long-haul, buying (depending on your variables) is likely better—due primarily to inflation.
In my spreadsheet, I factored in opportunity cost for the down payment AND the amount of principal that is tied up in the house over time using the same investment return rate compounded annually.
But even with a high average investment growth rate (12%—much higher than JL’s 3.5%) and lower than average real estate value growth (2.5%) both houses were more profitable to buy AFTER several years (9 years VA and 7 years OH), and they got better over time even after the tax benefit was reduced by the Tax Cuts and Jobs Act of 2017. Based on actual property value growth rates I saw profitability at 3 and 7 years, respectively.
Here are the Virginia house results:
Screenshot of Arlington, VA house calculations
…and here are the Ohio house results:
Screenshot of Beavercreek, OH house calculations
If you would like to play around with the numbers yourself (e.g., adjust investment returns, inflation, or add your own house numbers), you can download the unprotected spreadsheet here:
Be careful not to change the cells with formulas, as that could break the spreadsheet’s functionality. If you see an error or something missing, please let me know in the comments and I’ll take another look.
A few more notes:
While some locations may not achieve 2.5% inflationary growth, they can still be the better financial choice over renting, but you will need to hold the property over a longer period for the inflation-related benefits to make it worthwhile.
In the year you sell the house, reduce the opportunity costs from renting by the amount of the taxes/capital gains on those investments. Houses that you have lived in for at least two of the last five years provide a generous capital gains exclusion ($250K for single, and $500K for married filing jointly). (EDIT: This is a huge advantage for real estate over after-tax stock investing. When I sell I can get a $500K capital gains exemption and not pay the 15% rate on gains from selling my stock (my likely rate with my military pension, social security, tax-deferred account withdrawals and other income. That is a potential $75K tax savings over similar gains from stock or other long-term investment gains.)
You might be wondering, “what about closing costs?.” Good question. I paid ~$6K to close on my VA house in 2013. I would have locked up around the same amount on first, last, and deposit on renting a house, so that’s a wash. After 20+ years, the $6K is a deflated pittance on either score sheet. (Note that the landlord often increases the deposit amount if they raise the rent.) I did account for selling costs such as real estate agent fees in my spreadsheet when calculating the capital gain for each house. (EDIT: with recent changes to the RE agent fee structure, I do not plan on paying more than 1% for either buyer’s or seller’s agent)
Property manager costs: I see small-time real estate as passive income (or I make $2,800 per hour!). So for this calculation I did not include hiring a property manager if you need to rent your house out. This is a whole separate article, but like self-insuring instead of paying the renter’s insurance, I do my own property management. I have found the time costs to be negligible and property managers not worth the money in my experience.
Making additional principal payments toward the mortgage isn’t supported by my data. By doing so, you would lose some of the benefit of paying off a fixed P&I amount with future inflated dollars. Many people’s wages receive inflation adjusted raises and make paying off their mortgages easier over time. Also, the more money added to the principal will negatively impact the opportunity costs comparisons as the house value will change (usually it will increase) regardless of how much principal is paid. (EDIT: even if you have a high interest rate, the amount of interest saved is minimal. I focus on re-financing as soon as interest rates drop a full point or more).
You might be thinking “but what about all of the time an owner spends on his house that a renter doesn’t like managing repairs?” Being a renter doesn’t mean that you don’t have to spend time when things break. As someone who has rented 2 apartments and 9 houses and owned 3 homes (and later rented them out), I have found that for ALL of the houses I had to do the yard work and clean the gutters regardless of my ownership/renter status. I also spent as much time calling the landlord (often several times hoping he/she will respond in a timely manner), the back and forth negotiating time and date for repairs while the landlord coordinates with the repair company, and accommodating the actual repairs (I keep an eye on maintenance workers in my home) whether I rent or own—so for me it is a wash. Also, things like frozen pipes and vandalism occur in rentals the same as any home and the impact (loss of personal property, waiting for insurance claims to work, inconvenience of getting it fixed) greatly effects the renter’s time too.
Bottomline: Inflation makes a big difference
My decision to buy instead of rent in Arlington, VA returned roughly $206K over the last 10 years than I would have gained with renting a comparable house and investing the down payment and principal.
Likewise, my Ohio house returned roughly $24K more in the last 13 years than a comparable rental. This is despite having lower than average capital appreciation (2.4% vs. 3.5%). (EDIT: This house jumped in value by $56K (16%) and rent has increased to $28,800 (4%) annually in the 2 years since I did the calculations (2022 #s)—now my gains are a lot more!)
While $24K may not sound like much, don’t forget that these returns are above and beyond what I would have gained if I rented a comparable house and invested my available down payment cash at a 12% annual average return. This difference would be even higher if I had invested in real estate index funds (e.g., VGSLX which returned ~7% per year 2013-2022) or the 3.5% dividend amount that JL used for his calculation.
This only works if you keep the house for the long-haul. If you are going to sell before you breakeven, then renting is the better financial choice.
I hope this helps you to calculate the long-term financial value of renting vs. buying a comparable house, and helps you make a decision that’s best for your situation.
Addendum: After completing my analysis I stumbled onto Nerdwallet’s Rent vs Buy calculator. This has comprehensive variables you can input to make your comparison. I like the graphic that shows when the cross-over point will occur for buying vs. renting. However, I cannot access their formulas, so I’m not sure how they work behind the scenes. It uses statewide average property tax rates which do not reflect many local tax situations. Likewise, I find using a percentage of property value as a poor measure for repair and maintenance costs. For example, my less expensive OH house cost a lot more to maintain than my more expensive VA home.
I think my spreadsheet, updated each year using actual annual investment returns and inflation rates, will provide a more accurate picture if you wish to track your house’s real time performance and whether it’s better to rent or sell if you need to leave your home for an extended period of time. Note, high investment returns or capital appreciation percentages later on are less valuable than high returns early on due to sequence of returns and the power of compounding.
NOTE ON FLORIDA: I was hearing horror stories about outrageous insurance costs in Florida (which many are true). My friend who lives in Orlando and has a nice house with a pool shared his annual insurance cost which was nearly $2,956K while my $1M house in VA was only $1,145 for the year. That is almost triple the insurance cost BUT comparing property taxes of just $2,065 for his house in FL compared to $9,400 in VA, the FL house is still far less expensive to own. Even my OH house’s insurance and taxes far exceed his FL home. So while insurance in FL is very high, property taxes are very low and may make buying in Florida an option (I’m still hesitant about the hurricanes and other challenges in the state).
What? $2,800 per hour? This must be a crazy MLM scheme or some sort of bait and switch scam, right?
Not at all. On average I work one hour a month managing my two real estate properties. Each month I clear an average of $2,816 (including my principal and net of expenses and taxes). So my hourly rate is $2800!
But “passive”? That is impossible, you might say. Yes, really. As I show below, the average percentage of my time (.006%) that I spend each year managing my two rental properties rounds to zero! It essentially takes me the same amount of time as investing in stocks.
For 19 years I have owned one or two rental houses at a time (I have two right now). I like to say I am a lazy landlord, but actually I’m an efficient landlord.
I bought and lived in all of my rental houses before I rented them out. I have calculated that buying is often a better investment than renting (comparable houses), but ONLY if you are willing to keep the house for 7-10+ years, much like long-term stock investing. Since keeping these houses instead of selling was the better long-term investment, I now rent them to other people instead of renting them to myself.
So How Much Time Does It Take To Manage a Rental Property?
Let’s put this in perspective: In the 13 years (156 months) of self-managing my current property in Ohio, I had 87 maintenance and repair expenses. In other words, on average I had a 20-minute issue to resolve every 1.8 months.
Of course, I can’t ignore the upfront and more time-consuming effort to get a lease, advertise, screen tenants, and then handover the property (~10 hours) and the infrequent work of replacing my tenants (6 hours) or renewing the lease (2 hours)–a great house rents quickly. There is also the rental-property related work on my taxes that takes about an hour each year, and maintenance inspections of the properties that take about two hours per property each year. (My trusted handyman actually inspects for me in OH, so now I only visit that property once every 2-3 years).
On average over the last 13 years, I have spent about 35 minutes a month managing my OH property (not even a full hour!) and I clear over $1000 per month. That’s $12,000 a year for 7 hours of work – a pretty good wage. I make even more on my VA property ($1800 per month) and I average even less time per month managing it (25 minutes). I think you get the point–it doesn’t take that much time to manage a property if you have good systems in place.
Most months, nothing happens except the rent arrives by direct deposit.
Setting Up Good Systems Saves Me A Lot of Time
Number one is finding good renters. I don’t skimp on tenant screening. I always call work and housing references, and I complete credit checks unless they are active duty military, and even then I still collect all the info needed for a credit check.
Great renters are looking for a quality home for their family. They tend to care about their belongings, their credit score, the appearance of the yard, and they will care more about my house. Many of my renters do simple maintenance and repairs themselves, or they are willing to pay for improvements they want. One renter (with the help of her handy dad) offered to install new composite decking if I paid for the materials. The house now has a huge, great-looking deck for 10% of the cost I would have had to pay a company to install it.
Getting great renters requires a great house. I buy houses in desirable school districts and neighborhoods, which I know first hand because I first lived in them myself (my system works for a small number of rentals). I have bought in military communities, and I usually rent to senior-grade military families.
I make sure my lease agreement is comprehensive. Setting standards and expectations up front is key to avoiding problems later. My first lease was OK, but every renewal since I have strengthened it with lessons I have learned myself or learned from smart friends with more experience.
Set expectations with renters up front on maintenance and communication. I walk through with my new tenants how maintenance and repairs will work. For true emergencies (e.g., no heat in the winter or a water break), I empower them to call for repairs directly with the appropriate company if they can’t reach me quickly and it can’t wait. When they do reach me with a problem, I either have my handyman look at it (with a quick email or text), or I have the renter call a company of my choice (or theirs if I don’t have one lined up already). I have the bill come directly to me. This saves everyone time as the repairman has to schedule with the renters anyway, and the renters are very happy to be in charge of scheduling.
A reliable handyman is recommended but not required. I have a great handyman for my OH property but I have yet to find one for my VA property. While addressing maintenance issues takes the same amount of my time, having a reliable handyman saved me money and improved my confidence in getting quality work.
Take advantage of the quality and often free resources online to make renting a property easier. Online sites like Zillow (no endorsement intended) work great for advertising, tenant applications, and background checks. I invested about 3 hours, one time, to modify a premade lease for each state I rent in to make sure I comply with state landlord-tenant laws. I set up my property management tracking spreadsheet, where I keep a simple on-going record of income and expenses, in about 30 minutes.
If I only focused on the initial one-time effort needed in the first few weeks of renting out my house, then it may feel like a lot. But over a 19-year time frame, each month it is hardly any time at all.
Skip The Property Manager – It Doesn’t Take That Much Time
Since I have two properties and live far from either of them, I must have a property manager, right? Nope! I learned the hard way that a property manager doesn’t really save you any time.
If the water heater broke, the tenants contacted my property manager who would then call me about it. Then the manager called a repair person and scheduled the repair with the tenants. Then I was sent the paperwork each month that I needed to file away for taxes with the amount subtracted from my rent (or I was billed if the repair was major).
Now that I’m my own property manager, the renters text me if the water heater breaks. I ask them to call a repair company and schedule the repair at their convenience and have the company bill me. It’s the same amount of effort on my part and more convenient for the renter to schedule their own repair, but without having a middleman or becoming the middleman between the renter and the repair company.
With a 5-minute call from the tenant (or usually a text with a picture), and a 5-minute call to the company to pay (usually an online payment), the work is done and the problem is solved. I then open up my property management spreadsheet and record the expense (another 5 minutes). So after 15 minutes of work, the problem is solved.
On more complex issues like working with a neighbor to take down a shared tree, I had to write a good 10 texts back and forth to coordinate the work. It took me a wholehour total to get that job done – whew!
As my good friend and real estate expert Keith Nugent shared with me at a CampFI, you need to be your own property manager until you understand every aspect of it and then only consider hiring one once you own five or more doors. My experience confirms this. Since I’m not planning to expand my properties past two, I’m never planning to hire a property manager.
Don’t Confuse Stress With Work
It can be a stressfulI conversation to demand overdue rent or pursue eviction action, but these actions do not take up much actual time. The one time in 19 years I needed to pursue eviction it was definitely stressful, but it did not take much time to resolve. I called a lawyer (it took maybe an hour) who sent the eviction proceedings letter to the tenant. The tenant then left.
The reason I hear that people feel renting properties is too much work often goes something like this: “I don’t want to deal with calls at 3:00 am for an overflowing toilet.” I feel that is a worn out trope. For one, an overflowing toilet is almost always the renters’ fault for clogging it, so they would pay the bill for any repair or damage and clean up. My excellent renters have never called me for such things.
My tenants did call once at 11:00 pm about the heat not working in the winter, and I empowered them to call a repairman directly and that I would cover any extra fee for an emergency response (I don’t skimp on safety). Then I went to bed and slept well. Being called after 10:00 pm has happened maybe 4 times in 19 years and it took me 5 minutes to resolve each one.
I try not to confuse stress with time. Over the years, tenant issues are infrequent and rarely take much time. Even getting quotes for a new roof or windows only took a couple hours. I am responsive and get the problem fixed.
Is Stock Investing Truly Passive, but Real Estate is Not?
I often hear in FIRE podcasts and read in blogs that stock investing is truly passive – the old “set it and forget it.” While I am a “passive” index fund investor, I have found I actually need to spend some time managing my investments.
I rebalance every quarter so my funds stay within the percentages of my investment strategy. I spent time calculating my traditional IRA to Roth IRA conversions (I have some after-tax basis). It takes many hours to rollover my wife’s and my 403b, 457b, 401k, 401a accounts to our IRAs. I keep an eye on the stock market and buy when it drops 10% or more (push more bonds into stocks) and then I rebalance when the market recovers. I spend about an hour each year on my taxes related to my stock investments.
I spend nearly as much time on my stock investments as I do my real estate management and both pay me a handsome wage per hour! So technically neither is 100% passive, and neither has to be a lot of effort.
Basic real estate investing in a few houses can be fundamentally as passive as stock investing. If I ever did get too many rentals where I noticed and cared about the higher workload, then I’d switch to a good property manager and drop my level of effort back down.
Real estate investing, as with stock investing, benefits from up-front research. Setting up a good system will minimize your long-term efforts, diversify your portfolio, and save you money over renting if you decide that the renter of your house is you.
So is Real Estate Passive Income? In My Book – YES!
So, with all of this talk about how much time it takes to manage rental properties, it can’t be considered passive, right? Let’s run some numbers…
There are 2080 hours in a work year (40 hours per week x 52). I work an average of 12 hours per year on my rental properties, which is .006% of traditional work time. Even if I doubled it with 2 additional properties or quadrupled the time spent, it would still round to zero!
So, either real estate is passive income or I earn over $2800 an hour! Either way, it is worth the effort.
P.S. For further information on how being a landlord does not have to consume a lot of time, and how to set up good systems to become a “Lazy Landlord,” check out James Lowery’s presentation at the 2023 ECONOME conference.
I’m featured in this article by Noah Sheidlower, Business Insider, Sep 1, 2024
“Not all millionaires have big houses, boats, or fancy cars. In fact, six of them told BI their strategies to grow wealth — and keep it — are the exact opposite. ‘We aren’t flashy with our wealth because money isn’t our ultimate goal,’ one said.”
This Business Insider article focuses on 6 people who grew their wealth the old-fashioned way — spent less than they earned and invested the difference.
Here is one of my quotes from the article: “I push back against the worn binary of either make money to have purpose or retire early and sit at the beach all day sipping fruity drinks,” Hall said. “I strongly believe that early retirees can have fulfilling lives without the paid work.”
Read full article at Business Insider here. Since there is a paywall, you can also find the article on Yahoo!Finance here.
Post photo credit: From Business Insider: Getty Images; iStock; Natalie Ammari/BI
