[USER]

We’re in escrow on a vacation home and I’m getting cold feet
We live in a VHCOL area, vacation home is in a popular mountain resort area.

Early 40s with 2 young kids. Our expenses are $150-$160k. Expect it to increase $15k with the second home.

We could likely rent it out in the summer to offset the $15k expenses.

NW is ~$5.7M not including 1M equity in our primary home. Planning to pay cash so liquid NW would drop to ~$5M after the purchase.

Using the 4% rule, we’d still have a decent buffer between our expenses and safe withdrawal rate.

I feel like one of us could retire now but I’m still planning to work 3-4 more years to build up NW to ~6M again then wind down or coast. TC ~$500k.

All of this said, I felt comfortable in the purchase but worried about an incoming recession or another “lost decade” now second guessing if we should make the splurge or not.

We’ve always been frugal savers so this is uncharted territory for us to cut a little slack to enjoy our decades of efforts.

[Sean]

15k is a massive underestimate. It’s a 700k home. Maybe 15k for taxes and insurance hoa etc. could be possible. Another 10-15k for maintenance.

Then add utilities etc. So probably 40k per year plus the initial year for furnishings and stuff.

So I’d say you gave a little ways to go, but you’re pretty close on FI.

[Scott]

I have vacation homes, they run about 30k a year in expenses per home. You’re just fine on expenses. You could fire now.

[Jennifer]

We have a vacation property worth the same price range. Expenses are very low–under $10,000 including grass cutting, maintainance, etc. Given how much you have saved, go for it.

We paid cash and did the same thing. We might be able to earn more had we invested the funds, but it is worth it for the the enjoyment it brings, and thus far our return has been higher due to appreciation.

[Josh]

You’re more then fine. How didn’t you get a 5.7m net worth in your early 40’s?

[Josh]

$30k is more than likely the real cost average of the years expenses. Which would add about $750k to your fire number. And it sounds like that’s roughly the purchase price.

So, I would look at this as a $1.5 million cost to your fire goal.

Figure out how long it will take you to increase your portfolio by that amount and then ask is that amount of years worth the trade off.

[Annette]

I live in a mountain town. Everyone is losing fire insurance, so expect that to be a bigger cost in the future, IF you can get insurance.

[Keith]

Go for it. Real estate is a great long term investment. I bought my second home at 33. Rented the place a lot first two years then cut back.

You can do this when expenses high my costs are 15k on a 700k home. Taxes low. Then used this to buy my retirement home.

Will Fire at 56 next month. Didn’t hold me back. We also leverage second home to travel through home exchange.

I can send more details in Pm. Will travel cheaply with HE.

[Christina]

We just did exactly that, paid cash for a vacation home in a mountain resort area for $1M+.

It was nerve wrecking to spend the cash but we have more than enough for retirement and we are ready to enjoy life while we still can. Not going to rent it out either.

Sometimes you just have to start spending and not keep hoarding. We don’t have kids though so not worried about having to support anyone other than ourselves.

Your yearly expenses sounds a little low for a $700k home. Taxes and insurance will only go up, especially if you plan to rent it out. I’d budget a higher amount.

[Jason]

So, to better justify your purchase to yourself. I’m over simplyifying this a bit since there maintenance cost, etc that you’d have to think about too.

And not looking at where else your money could be better spent.

Assuming the added yearly expense is only $15k for the mountain resort vacation home, and you would be frequenting the place yearly anyways.

If you rented a similar place during the same timeframe you planned to go each year.

How much would that cost you each year? If the answer is $15k+ or even more.

Then you’re technically adding an expense that you were going to be adding anyway.

On top of that, if you’re able to rent it out for the times you’re not there, and can get at least $15k a year.

You’re actually getting free vacations each year. Saving you on your yearly vacation expense

[Molly]

Go for it, enjoy life and make great memories with your kids! All will work out

[Meliss]

I think it’s normal to have cold feet in escrow. Is the home worth it to you/ your family? Only you can decide!

[DM]

It’s a good buy go for it. Especially since you can rent it to offset expenses. You certainly can afford it and you have the choice to work a little longer or even part time.

[Diane]

The factors that moved me are not the numbers and the retirement dates, but that you have young children and that you have always been savers.

If you want to do this one special thing and give your kids those memories, then I think it’s worth it.

Sounds like you’ll still be in decent shape for your FIRE.

[Marcia]

Do it. You have plenty of money and you’ll make so many memories there and you could always sell it down the road if needed.

We did the same in 2023… but at the coast rather than the mts… and we saw it as an alternative investment to all our funds in the market.

Waterfront property (not in a flood zone) will only become harder to come by and we most likely won’t have it lose value.

At the same time we are able to spend several months there a year with remote jobs and enjoy it often as a family.

Our expenses are only slightly more than we had been paying for vacations already.

That is the one downside though… we like to be there so often now that we don’t explore other places as much!

[Kate]

Will you enjoy it and make memories there with your kids. That, after all is what all of the collecting money is for..

It’s not the number of $ it is what you do with it

[Author]

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