Thursday, September 30, 2021

The Power of Wiggle Room

Since Memorial Day weekend, I've been in the middle of a real estate transaction.  Like everything else, living in New York City seems to add an additional difficulty factor, and everything is just that much more complicated and takes just that much more time.  Four months later, and we're just now about to sign papers for closing.

We're purchasing a unit in a co-op building, and for those not familiar with what that entails, it is very similar to a condo in that it typically consists of multiple units housed within the same building.   When you buy a condo, you own your unit within the building.  A co-op operates a bit differently.  In a co-op, you are buying shares of the building, much like you buy shares of stock.  So, basically, you become a stockholder of sorts within the business entity that owns the building itself.  In turn, you also get the lease for your unit.  Because of the manner in which ownership is held, co-op boards tend to take a lot of care in screening potential buyers.  This process involves putting together an extensive "board package" which gets submitted to the board to review.  The board package includes letters of recommendation and a plethora of financial information.  Once it's been reviewed, buyers go through an interview process.  This is all in addition to the process required of the lender.  

So, we had finally made it through all of these hoops and were scheduled to close when hurricane Ida came through New York.  As a result, two days before we were scheduled to close, FEMA required all of the banks in 4 of the 5 boroughs to pause their closings and get new appraisals to assess for potential damage.  Now, our new place is on a hill on the 20th floor of a building.  So, no damage at all!  But, we were required to wait nonetheless.  The new closing date was scheduled a full 19 days after the original one.  That's a significant difference when it comes to planning!

When we started trying to mentally plan for this move, we were tempted to try and have as little overlap as possible in terms of having both our rental and the co-op.  We could have given notice at the first of the month so as to minimize the overlap and our need to pay for not one, but two places to live.  At the time, this seemed like the wisest financial move to make.  But then we got to thinking about how nice it would be to not feel rushed, to have enough overlap to allow the process to simply happen rather than racing to the finish line.  So, we didn't give notice.  Thank goodness we didn't.  Had we given notice, we'd be in a mad dash to get our things moved on time.  Quite frankly because of all the coordination required in moving into a co-op, there's very little shot we would have made our self-imposed deadline.

Sometimes where our finances are concerned, we get so focused on every single penny that we forget the value of building in some wiggle room!  There's a value trade-off to consider.  The extra time (and breathing room) was tremendously valuable in our situation and worth the possibility of being doubled up for a month.  Thank goodness we build in that buffer.  This is also worth considering when working on your budget.  I am a huge advocate for a tight budget, but also feel that failing to leave a little bit of room to breath is critical.  This also applies to an emergency savings; having 3-6 months of a "ramen only budget" is a great start, but I'd prefer a little more padding than that.  What about retirement planning?  I can survive off of this lesser amount, but what amount will really allow me to thrive?

On the journey toward financial independence, we find ourselves rushing toward a goal, and why not?  I mean, that's our freedom!  Of course, we're in a hurry!  But perhaps it's worth slowing down just a little and considering whether you'd be happier building in a little more wiggle room whether that be regarding your timeline, savings goal, or something else.  

No comments:

Post a Comment