Tuesday, August 4, 2020

Adventures in Landloring: 120 Days into COVID-19

Today, I would like to discuss with you some adventures in landlording during COVID-19...  This subject seems important because of the desire many people have to get into rental real estate, and also the concerns that many are having with regards to eviction moratoriums, and the like...

The individuals that rent our property in Oregon have been relatively consistent pre-COVID.  They have only had one late payment, and keep the management updated about repair needs, which we greatly appreciate.  In March of 2020, they paid full rent.  When my management company learned about local shut-downs, they reached out to tenants to make arrangements, etc.  Unfortunately, despite an agreement to pay, they were not able to pay April's rent.  They were also not able to pay May's rent.  In June, they made a partial payment.  Finally, in July, we received a full rent payment again.

During this time, my mortgage payment was still due each month on the first.  So, what did I do?

I paid it.

That's it.  Nothing fancy; no magic wand.  I just paid it...and the truth of the matter is that I wasn't particularly stressed out about it.  Why?  Because we've chosen to live off one full-time income rather than two.  Since we're both working, we just paid it.  Of course, we would have preferred to save that money or invest it, but it was fine.

There are some really important takeaways when evaluating this situation:

  • Real Estate is not for the faint of heart.  Don't get into it before you're ready.  It can be an absolute blessing, but only if you have positioned yourself to weather any possible storms.
  • Budget to one income.  I know this can be difficult, but if you are a two-income household, and you can whittle down your expenses so that it can be covered by one income, a disaster such as this one isn't nearly as stressful.  If you are a one-income household, consider, what percentage of that money do you really need to use to meet your expenses?  Can you trim expenses so that you are capable of living on a smaller percentage of it?
  • The property needs it's own emergency savings account!  We didn't even need to dip into it, but we had it.  Our strategy is to allow the direct deposit from the rent to come into a savings account specifically set up for the rental property.  The mortgage can be automatically pulled from there, and the remainder used to build it's only emergency savings (for us it's about 6 months of the mortgage payment).  Once an appropriate amount is stacked up, use the funds in another way.

The Law of Attraction Perspective:

People that have been reading my work for a while know that I am a believer in the Law of Attraction.  When I consider the situation that came about with our rental property, I am very aware that my emotional state remained steady.  I didn't feel anxious or stressed out.  I never had any negative feelings about the renters.  I love our rental property.  That is not to say that there was no "contrast" within this situation.  I noticed that there was one thing that I didn't feel good about.  It was the mortgage loan itself.  I am very appreciative of this negative feeling where the mortgage loan is concerned. Though mild, the emotion provided me with the contrast needed to highlight what I really do want.  I want to let go of that loan.

For some time, we've been piling up cash so as to move out of our NYC rental into a condo/coop that we own.  That is still our intention; we both feel really good about the idea of moving.  But money is a bit like a chess game to me.  I am always thinking a few moves ahead.  Once my partner and I complete something, we are already aware of what we're going to do next.  Until just recently, I honestly didn't know what our next major move would be (we could go a couple of different directions).  I feel as though the contrast provided by this experience has lead me to an inspired action.  I definitely feel inspired to eliminate that mortgage.  So, after we move out of our rental, I suspect we'll focus our attention on letting go of that loan.  Even the phrase "letting go" of the loan feels very freeing to me.  

Sometimes, an unpleasant experience can highlight things that we need to let go of such as a loan or burden, other times, it might highlight something we would like to draw into our experience.  With all of the harsh experiences during the past few months, is there anything that you've become inspired to either release or draw into your experience?

Wednesday, July 22, 2020

Lessons from Quarantine: Part 1

There's nothing like a pandemic to make you want to avoid the grocery store like the plague...Literally!  In the past 90 days of quarantine we've gone to the grocery store once, Target once, and the pharmacy twice.  When I say we're avoiding the grocery store, I mean it.  We stocked up on staples before the "stay at home" order went into effect.  We focused on frozen vegetables, canned food, dried beans, grains, flour, etc.  Furthermore, I've realized that I really dislike that store.  It's not where I do the bulk of my shopping anyway, but a convenient place for staples...  But this Coronavirus...  It has somehow managed to draw into focus my priorities.  If I don't like that place, why do I go there?  Because it's convenient?  But is it?  Is it really convenient?  It seems pretty inconvenient to go consistently to a place I dislike to give them my money.  It didn't use to be quite like that.  It crept up on us both...  We used to do more than 50% of our grocery shopping at the local farmer's market, often up to 75%, and just used the grocery store to fill in with things like coffee, toilet paper, tofu, tempeh, and the like.  As busyness set in, there were more quick trips to the neighborhood grocery store.  You might try to defend me by suggesting that we were probably saving money.  We weren't.  The grocery store in my neighborhood doesn't have great sales or stellar quality.  It's really pretty average, didn't save me money, and doesn't have the "world's best organics."  So, what gives?

Being forced into quarantine, we've all been forced to decide where we spend the effort going.  It's
because we're limited.  It's also because we know we're going to wait in lines that are completely insane only to find out that we can't even get what we really want anyway.  Plus we will have risked contaminating ourselves with an illness that is claiming more lives every day!  All that for a place I actually don't really like?  In my neighborhood, Inwood, there's a farmer's market every Saturday...even in the winter.  Come rain, shine, or pandemic, my farmer's market is there...And so am I.  I love it there.  I feel good about supporting local farmers just upstate of me.  I also feel really good about what I am putting into my body.  I feel good literally walking there and placing my body in that physical space.  This highlights a realization for me that I think I've been coming to in other areas of my life...  I really don't care to place my physical body into spaces that don't feel good.  How simple is that?  Why wasn't I able to conceive that in such a simple way before now?  Perhaps I wasn't ready for the idea.

Last week on Saturday, we went to the farmer's market where we could easily purchase produce, eggs, bread, meat, and cheese (for anyone that consumes those things).  We bought what we needed, and went home.  Later, I realized that I needed an ingredient and decided to walk down the street to a local shop that is a gourmet grocery, independently owned.  I supported them and visited a little shop that I really enjoy.  I avoided a place that I do not enjoy.  Simple.

When we emerge from this crazy, alternate universe we've been spewed into, there are some businesses that will not be there.  Some will literally never open the door again.  My neighborhood grocery store is pretty safe, I think.  The teeny, gourmet grocery in my neighborhood?  I doubt they're safe.  It would break my heart if they closed.  Likewise, if my local farmer's market shut down, I would be devastated.

Show me your money, I'll show you your values.

Sounds harsh, doesn't it?  Sometimes reality stinks.  If I really look at myself, I have to be honest that outwardly, it looks like I value a dimly light place with a tiny organics section and too much shelf space devoted to a brand I literally refuse to buy...  WHAT?!   Well, it seems pretty clear to me that I either need to make peace with becoming someone I don't really appreciate and adopting a new set of values that I also don't like, OR  put my money where my values are...

I choose the latter.

Our Quarantine: The First 90 Days

We're about 90 days into quarantine at the writing of this piece.

My partner and I just completed our school year, which was quite an adventure, though I have learned this about myself:  I like working at home. I have the discipline to be successful at it.  I also feel like just the act of losing the commute has given me custody of more of my time: the most precious commodity to me.  The time gained has allowed us to exercise more, sleep more, and eat better.  In fact, my partner has finally perfected a cookie recipe she's been working on, in addition to hand-rolled pasta: linguine, ravioli, etc.

This unplanned slow down has had several side effects in my life.

This first is lost income.When "in the building," teachers have the ability to earn extra money by running after school programs, clubs, coaching, directing, or scoring exams.  All of those things were cancelled when school went remote.  I lost hours at my seasonal side job due to lack of people coming in due to the pandemic.  We've also lost rental income.  We've both kept our regular paychecks, and I realize how lucky that makes us.  We're still able to save money, although at a diminished rate compared to what it was before.  Many people aren't as lucky as we've been.  I completely recognize that.  Sometimes I feel completely redundant, but the fact that our lives are budgeted more or less to one income means that we have a significant amount of wiggle room if something crazy like this happens.

I've also realized that paying the extra fee for grocery delivery is worth it.  Amazon finally gave us "permission to shop" at both Amazon Fresh and Whole Foods.  We pay a delivery fee plus tip for the service, but honestly, it's worth it.  We only order every two weeks or so for items we cannot find at our local farmer's market or our local tiny gourmet grocery.  I don't think we're paying any more or less than before, but we're being more deliberate.  While I realize we're contributing to the huge corporation that is Amazon, we're also focusing the bulk of our shopping on the farmer's market, and I value the higher quality I receive from Whole Foods versus my local chain grocery.  I also value organics and not needing to physically go to the store.  I used to physically go to two separate stores EVERY weekend plus the farmer's market run.  That's a lot of running around that I don't miss.  I think this is a habit that will remain in our lives.

I am lucky enough to do some acting every Spring in a play festival, which I truly love.  I was very nervous that it had been cancelled this year, but the directorial staff of the production company was brilliant enough to re-imagine it as a series of radio plays that would be published via podcast.  While the stipend for this work was modest, the creation of art itself brought tremendous joy to me.  This is tremendously different from how I felt with the loss of my side job.  After my seasonal side job came to an end, I realized that I was thrilled to have my time back, and that it was costing me way more hours that the money was worth.  I think that's something the Covid quarantine has done for me.  It has make me realize how much I value my time.  I find myself evaluating things in my life according to a very different currency.  How much of my time will this task take me?  Do I value the task enough to spend my time doing it?  During the past 90 days, I have spent really very little time doing things I simply don't like.  I have been back to the basics.  For me, those things are: healthy living, learning, art, and relationships.

I've been going on hikes every day.  We've always cooked at home, but we've been taking our time, and really enjoying the creation of home cooked meals.  I've had more virtual happy hours and phone calls with loved ones that I had before.  We're not in person, but connecting more deliberately.  I want to carry those habits forward.  Also, I need more art in my life, and I'm willing to evict a few things in order to make that happen.

Have you been finding yourself evaluating life through the lens of this currency called "time?"  What habits or changes are you likely to carry into your future as a result of your experience during Covid? What have you learned about what you value?

Friday, July 10, 2020

Being a Landlord During COVID-19

This post was originally written on April 16, 2020.  While I don't always specify that information, it seems important given the rapidly changing face of COVID in our country.

We own a rental property on the west coast.  Pre-COVID-19, our tenants were going to pay for items that needed repair due to their own negligence.  We had already paid for the repair, and they were going to pay us back for it the following month.  It honestly was a really minor issue, no big deal to either party.  Then, the coronavirus struck.  Out of concern for our tenants, we reached out to the management company and offered to allow them to spread out or defer this charge-back as needed.  I have no idea what industry they work in and to what degree their finances have been impacted. We have no direct contact, it's all via the management company.

Apparently, the tenants were happy with that and deferred the charge-back.  Additionally, they requested to pay their rent in two installments, which was fine.  So far things in that arena are working out alright for me, but I am very much aware that as these "stay at home" orders continue, things could get increasingly stickier for everyone involved in rental real estate.  Right now there are orders in place all over the country that prevent evictions for a certain amount of time.  They also allow renters to avoid late fees for nonpayment.  The problem is that these rent payments stack up.  Who wants to have a several thousand dollars past due rent bill hanging over their head?  That sounds like a huge mountain to climb, and I don't wish it on anyone.  There are some proposals out there that suggest paying rent simply be suspended for a certain duration of time. This proposal operates under the idea that property owners will be able to place their mortgage loans into forbearance for that same duration of time.  Meanwhile, interest and fees stack up for them.  With no money coming into pay such fees, they just keep growing.  Forbearance is expensive even if you can get one!  If you can't get one, you run the risk of falling behind on the mortgage.  If things don't clear up soon enough, you lose the property.  That's a way down the pipeline, and hopefully, it doesn't go that far, but it could.  If the home is foreclosed upon, the tenant's world also gets turned upside down.

Additionally, if there's no rent, management companies won't get paid, and will no longer be able to pay their staff.  What about repairs?  I have paid for three different (small) repairs since the beginning of 2020, which is fine.  If no rent gets paid, there is no money to make repairs, so they'll probably be put off.  This is not good for living conditions. It's also not good for the small business owners and repair people that count on that income.

At the same time, you can't expect people to pay rent with no money, right?  This is where individual states need to come up with solutions that stand a chance of helping the most people.  Individual states have the ability to direct the manner in which funding from the CARES Act gets used in their state to a certain extent.  I've read about proposals being made by various rental real estate organizations.  They are appealing to states to utilize CARES Act funds to issue rent vouchers to individuals that have been financially impacted by COVID-19.  These vouchers would prevent renters from ending up with a backlog of rent payments due at some later date.  It would also provide some much-needed relief to a renter's wallet.  Meanwhile, management companies keep operating, owner mortgages keep getting paid, and repair people keep servicing homes as needed.  Personally, I appreciated this proposal.

This is a huge problem, and I am very interested in hearing some of the proposals that are out there.  I just hope that they serve everyone.  While some landlords are huge corporations, others are just individual people like me...  People that have a regular job, one rental property, and a mortgage on that property that needs to get paid.  Our governors have a big job to do.  I do not envy them.  I just hope in the process they protect as many people's interests as possible.

What are your thoughts?  How could individual states protect renters, property owners, and the incomes of those contractors involved in rental real estate in the fairest way possible?

Thursday, May 28, 2020

Our Quarantine: The first 30 days

My partner and I are both teachers, which some of you may already know.  So, we're among those still receiving a paycheck during the crisis of COVID-19.  That is not to say we haven't experienced a loss of income.

In the middle of March, we were given notice that the school building would be closed until at least the end of Spring Break (a full month away), a deadline that has been extended to April 29th, and then again by the Mayor of NYC to the end of the school year.  We had three days to put all of our classes online and learn a completely new platform, not to mention, rearrange our already too small NYC apartments to include a "virtual classroom" for two teachers of completely separate schools, grades, and content areas.  Making these adjustments would ensure our students could still collect the credit they needed despite the growing public health crisis.

What could not be ensured is the additional income many teachers have come to rely upon.  We all know teachers in this country are not paid the best and may have taken on numerous side-gigs to fill in the gaps.  What does that look like in our household?  We both take on additional responsibilities at our schools which generate additional income.  This might be running clubs, after-school tutoring or test prep, scoring state exams...  We are also both certified tax preparers that work during tax season in local tax offices.  Needless to say, all of these sources of additional income have dried up, including tax preparation!  Once COVID-19's extensive reach became apparent, the government pushed back the tax deadline, and people were entirely more concerned with their safety than with their taxes.  Rightfully so!  Of course, this caused the tax offices to reduce the number of hours given to employees because of a change in demand...  More income lost.

Because we use a management company, there's a fairly large buffer between our renters and us.  We don't know what they do for a living but imagine their lives have been touched by the Coronavirus as well.  We've been notified by our management company that they plan to pay April rent.  We hope that they're among those who are able to work remotely and that this trend continues.  If not, we'll still be able to pay our mortgage.

Lucky, right?  While some of it might be luck, the money moves we've made to ensure our safety was anything but luck.  We deliberately choose to live mostly off of my partner's income, leaving mine to be used for savings and/or other financial goals.  So, we've been focusing our attention on building liquid savings for the past couple of years with the goal in mind of saving for a 20% downpayment plus a fully-funded emergency savings.  Also, every dollar of profit from our rental property goes into its own savings.  In fact, our rental property has it's own 6-month emergency savings.  Losing the majority of our side-gig income feels like it drastically reduces our monthly savings rate.  The truth is that we might be slowed down, but not devastated, and that's key!

I remind myself that if this experience teaches me nothing, it was worthless.  I can't have all of this time be wasted; so, what have I learned in this first 30 days?

I have learned not to take for granted my ability to hop on an airplane and see family members.  I lost a family member during this time (non covid-related). With everything that's going on, my only choice was to stay put.  Even if I had tried to fly to this person, I wouldn't have been allowed into the facility where he was staying because I was coming from New York State, the epicenter of the pandemic.  Fortunately, I went to see this family member just before the outbreak, and I feel really good about that.  Regardless, the ability to mobilize during a family emergency is really important and shouldn't be taken for granted.

It's also become clear to me that we need to pay off the mortgage on our rental property.  No matter what happens, we'll be able to make the payment.  However, when I think about the idea of the loan being paid in full, I feel very peaceful.  That seems to be my inner guidance system telling me what my next money move should be.  I tend to wait for that.  I let my brain do the homework so that I fully understand my choices, but then I wait for one to feel like the right one for me.  Paying off the mortgage feels like one that is rising to the surface as being the right choice.  Of course, I'll sit with it for a while.

I've also learned that our choice to learn to live on one income rather than both of our incomes was incredibly wise.  It has kept us safe within this situation.  It feels like something that we should continue to carry into the future.

Additionally, my career field is fairly stable.  Despite teachers being wildly underpaid, we can count on having our positions.

Have you learned anything about your financial situation from your time in quarantine?  Has it inspired you to set any particular goals or take any actions?

Friday, January 3, 2020

Why Slow FI?

Although I've been pursuing financial independence (FI) for some time, there are ways in which I have never fully fit into the mainstream FI community.  While I like to crunch the numbers, eliminate debt, invest, and can geek out about a variety of financial strategies with the best of them, there are areas where I absolutely march to the beat of my own drum.  I believe in the Law of Attraction, that listening to my inner self, and emotions, as well as mindset,  is important, as it heavily impacts my financial life.  I also believe in enjoying the journey.  In other words, Slow FI.

First, What is Slow FI? 

A recent post by The Fioneers defines Slow-FI as being "when someone uses incremental gains along the journey to financial independence to live happier and healthier lives, do better work, and build stronger relationships."  I've been going on for a seemingly long time about how important it is to feel good in connection with our money.  Feeling good breeds inspiration.  Inspiration leads to inspired action.  Inspired actions create the positive outcomes we desire.  Slow FI does exactly that!

What's really interesting to me is that many people in the FI community are focused on a destination.  A place in the future where they've reached the so-called "golden number," and ride happily off into the sunset with freedom in hand.  Actually, it sounds great!  I don't have any problem with it, as I too have a destination in mind.  But this is where my path diverges with theirs.  Many of the FI focused have cut pretty much all of the excess and diverted all of their additional funds to fueling their investments and eliminating excess financial baggage (debt).  In the process, much of life seems to be on pause.

I am very mindful of my spending, and pretty much every dollar has a job.  That being said, some of those dollars have the specified job of keeping the journey wonderful.  I need a little magic in my life and I am not willing to eliminate it in order to reach a destination faster.  I want the journey to be every bit as beautiful as the destination.  I believe that Slow-FI provides that.

Let me tell you a secret:

I still have federal student loan debt, AND I traveled to Italy last year.  How dare I!?  I'm not supposed to go anywhere until I've eliminated those student loans and reached the golden number (note: dripping sarcasm)!  But really, in all actuality, I think that's a move that would get mixed reviews in the personal finance community.  There are two parts to that choice.  Regarding the student loan debt, I am a teacher and eligible for some loan forgiveness.  I've been trying to make a decision about which forgiveness program to utilize, and have been waiting for the action to be inspired.  I won't pull the trigger on that until it feels right.  In the meantime, I can keep saving money.  Also, I don't know how many years of overseas travel are in the cards for me. I have a beautiful sister with Cerebral Palsy, and she may eventually come to live with me.  Now, this might be in twenty years; it might be never.  If that situation does come about, at that point traveling long distances by airplane becomes more difficult. I can't afford for my life to pass me by while I'm white-knuckling my finances.  While unlikely, it is possible that in ten years my sister could live with me.  If I spent the next ten years focusing on achieving the number (dollar amount to reaching financial independence) to the exclusion of everything else, I might never see Thailand, Australia, or Japan.  I am actively working with my partner in pursuit of full financial independence, but we're absolutely Slow FI because the journey is worth enjoying.

The Key to Slow FI:

I think one of the keys to success with Slow FI is being mindful.  Be deliberate with the choices being made with incremental financial gains.  Making choices that bring joy into the journey will increase mental and emotional well-being.  To me, that is not only the key to Slow FI, but also to Law of Attraction Finance.