Your Home – Asset or Liability?

Last month I listened to Paula Pant interview Chris Hogan, the author of ‘Everyday Millionaires’. According to the measurements used in that study, it may well be that we are on our way to being millionaires, but I am not sure whether I agree with the definition of millionaire, as they took into account the value of their houses.

Three years ago we moved from a small terraced house to a four bedroomed detached property. Mr Simple had sold his own property – a modern starter home – before he moved in with me for a while. We wanted a house with a large garden, as we love growing our own vegetables, so in many ways we bought the house for the garden rather than the size of the building.

At that point in my life I had not discovered the FI/RE movement. The reason for the move was not only to have a bigger garden, but also to move nearer to Mr Simple’s place of work. I transferred to another office within the same organisation. The house we live in is about equidistant between our two places of work. In that way one would say that the move was in line with the FI/RE principle of reducing your transportation costs, as each of us had a twenty-minute journey to work. Now I say ‘had’, as Mr Simple has been made redundant since we moved house and my office has been shut due to efforts on the part of my employer to reduce overheads. Fortunately, I am able to work at home a lot, but when I do have to go to the office it is an hour’s drive away.

Not only is it in this study that the value of a property is considered an asset, but many FI/RE blogs post monthly net worth updates which include the value of their house minus any outstanding mortgage balance that they owe. The question that I have is whether the value of your house should be considered in your net worth calculations. According to Robert Kiyosaki of Rich Dad Poor Dad  when calculating your net worth you should not include your home.

We have about £370,000 equity in our home, but that money is not accessible to us, as we don’t plan to sell it and even if we did we would still need somewhere to live. We could buy a smaller property and therefore invest some of the money, but not all of it. 

Robert Kyosaki not only believes that you should not consider your house an asset, but in fact it could be considered as a liability. A house has to be maintained, there is decorating to do, it needs cleaning and you have to pay to heat it and light it, as well as other bills such as council tax. The bigger the house the higher the bills, so even though some would say that a large house means a higher net worth, in fact it could be stated that the greater the value of your house the bigger a liability it is.

Now that we have this house and I have got the FI/RE bug I plan to consider how to turn it into an asset. At present there is a considerable amount of decorating to be done, which Mr Simple has turned his hand to now that he doesn’t have full-time employment. Ideas that come readily to mind are AirBnB, renting out a room to a lodger, hosting overseas students and renting out the driveway for parking as we live near an airport. I need to do some research on each of these and plan to share my findings with you over the next couple of months.

Do you see your house as an asset or a liability? Have your turned your house into an asset? I know that Gentlemans Family Finances has delved into the world of AirBnB. Have you tried this or any other ways of making your house pay? I’d love for you to share your experiences.

Exercise the Simple Way

It has been an absolutely glorious weekend, particularly considering that it is February. I love the sunshine and through dark and miserable January I can’t wait for the lighter evenings and warmer weather. This year it has arrived early. When it is warm and dry there is no excuse for not getting outside and enjoying the fresh air. And, it can save you money.

Leave the car at home when you can

Mr Money Mustache advocates cycling or walking and that’s all very well if you live near work, but for me it’s just not possible, particularly as I not only have to travel to the office, but during the working day as well. I have realised that despite this difficulty, I do live close enough to the local town to be able to walk there. We didn’t think about this when we bought the house, but now I realise what a bonus this is. We use the town for little bits of shopping, the library, GP, dentist, etc and it’s all on our doorstep.

Although it is only a mile away, when it is tipping with rain I must admit that I do take the car. Yesterday, as the sun was shining, I walked there and back, carrying library books and shopping on the return journey. Despite the good weather I had chores to do in the house in the afteernoon and so by about 5 o’clock I was desperate to get outside again so we went for a short walk. Until recently my step count has been abysmal, but yesterday it was 17, 455!

Free horse manure

Today, as it is beginning to feel like spring (I am slightly worried that we are going to get frost and snow at some point though – this weather is too good to be true or a confirmation of global warming) we decided to go and get some horse manure for the garden. A friend of a friend has horses and allows us to take as much as we want. It’s just a short drive, but then involves filling old compost bags with the manure, loading them in the car and then wheelbarrowing them down the garden back at the house. Two trips took us two hours in total. Lugging heavy bags of rotted manure certainly got my heart rate up – almost a workout I am sure.

Oh, and I forgot to mention that I had already been for a short jog this morning. At this time of year I usually fire up the treadmill and watch YouTube whilst doing a short jog, but this morning I decided to hit the lanes in the sunshine. It was lovely, but jogging outside is much more difficult and the slightest uphill section kills me. It does feel good though when you get home and can relax over a breakfast knowing that you’ve already done your exercise for the day.

This afternoon we have been out in the garden just tidying things up. We are very lucky to have a large garden – 200ft long in fact – but this does mean that it you are at the bottom of the garden and have left something in the house it is a long way to go back for it – hence my step count today – 15,427!

Take the stairs when you can

Tomorrow it’s back to work and on some days my step count is less than 1000, but this evening I am feeling pretty good. I think the message is that even if you can’t be MMM and cycle everywhere every day, there are probably some days when you could incorporate exercise into your routine, even if it’s just taking the stairs rather than the lift, throwing yourself into the housework or pottering around in the garden.

I think that the sunshine is set to continue for a few days, so get out and enjoy it while you can.

Creating a Morning Routine

According to Laura Vanderkam, learning to use mornings well is what separates achievement from madness. Before the rest of the world is eating breakfast, the most successful people have already scored daily victories that are advancing them towards the lives they want. Successful people have priorities they want to tackle or things they like to do with their lives and early mornings are the time when they have the most control of their schedules.

Not all hours of the day are created equal

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In her research Laura Vanderkam found that people who were serious about exercise did it in the mornings. At that point emergencies had yet to happen and they would only have to shower once. New research into willpower is apparently showing that tasks that require self-discipline are simply easier to do when the day is young. When you’re on a diet it’s unlikely that you will tuck into that packet of biscuits for breakfast, but come the afternoon your willpower may be waning and you may struggle to resist them. For successful people regular activities develop into habits. Getting things down to routines and habits takes willpower at first, but in the long run conserves willpower.

Five Steps

From studying people’s morning habits, Laura Vanderkam has learnt that getting the most out of this time involves a five-step process:

Track your time

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Part of spending your time better is knowing exactly how you’re spending it now. Write down what you’re doing as often as you can and in as much detail as you think will be helpful. While you may be thinking specifically about your mornings, try tracking a whole week. The reason to do this is that the solution to morning dilemmas often lies at other times of the day. You may be too tired in the mornings because you’re staying up late. But if you look at how you’re spending your nights, you’ll notice that you’re not doing anything urgent or particularly enjoyable. A TV programme can be recorded and watched later – possibly while you’re on the treadmill at 6.30am.

I have worked out how much time each activity takes so that I know what I can fit into my routine. When you can be confident that you have enough time to do what you want to do, you don’t need to rush and can relax and enjoy your morning.

Picture the perfect morning

After you know how you’re spending your time, ask yourself what a great morning would look like for you.

Think through the logistics

Map out a morning schedule. What would have to happen to make this schedule work? What time would you have to get up and what time do you need to go to bed in order to get enough sleep? Can you get to bed by that time?

Build the habit

This is the most important step. Turning a desire into a ritual requires a lot of initial willpower and not just for the first few days. Start slowly. Go to bed fifteen minutes earlier and wake up fifteen minutes earlier for a few days until this new schedule seems doable. Choose one new habit at a time to introduce. Chart your progress. Habits takes several weeks to establish, so keep track of how you’re doing for at least 30 days. Once skipping a day feels like you forgot something you’ll know you’ve got a habit and can take your ritual up a notch.

Tune up as necessary

Life changes and so can your morning routine. Tune it as you need.

Ms Vanderkam’s takeaway message  – the hours before most people eat breakfast are far too precious to be blown on semiconscious activities. Make yours meaningful.

So have you got a morning routine? If not and you try this out, I’d love to know how you get on.

The Longevity Plan Chapter Five – Find Your Rhythm

For me this means having a routine. I am a creature of habit and love routine maybe more than most. I find it comforting. Some people seem to enjoy living chaotically and stumbling through the day from one crisis to the next, but I like to know what to expect. I don’t find it boring; I find it calming. From the moment that I wake up I know what is going to happen, as I have a morning routine and I look forward to each part of it. Every evening I plan the routine for the next day. I can’t do the same each morning as my work pattern varies. Sometimes I leave the house at 8am and other days I can log on to my computer at home at 9.30am.

Waking Up Slowly

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My day starts when my sunrise lamp gradually lightens the room. Sometimes this wakes me up, other days it takes the alarm to do that, which is actually the radio coming on. The dulcet tones of Mr Humphrys arguing with a politician on the Today programme is my choice of listening in the morning.

Every day starts with a cup of tea in bed – you may be able to guess that I don’t have children! This used to be a weekend treat, but now it happens every day. Monday to Friday I make the tea, but on the weekends I get to stay in bed and my other half makes it.

Whilst drinking my tea I read a non-fiction book; at the moment it is A Life Less Throwaway by Tara Button, founder of the website, Buy Me Once.

If I have time I exercise. This is usually a short jog on the treadmill. If I don’t have time I just shower. Before I leave the bedroom I turn back the duvet to let the bed air. I don’t agree with the recommendation that you should start your day by making your bed, because my understanding is that you sweat in the night and you need to let the bedding and mattress dry out. I would say that it is actually unhygienic to make your bed straightaway.

Quiet Time

I always have ten minutes sitting in silence. I am not sure whether I would call it meditation, as I don’t think that I have mastered that art. I sit with my eyes closed and try to concentrate on my breathing. Thoughts come and go and sometimes things that I had forgotten come into my head or solutions to problems dawn on me. Other times I can’t focus and I give up before the timer goes off on my phone to say the ten minutes are up. Then it’s breakfast time before I start work for the day. Whilst eating my breakfast I read emails on my phone.

Sunlight

Dr John Day recommends getting outside into natural light, especially in the morning, but at some times of year it isn’t light in the morning! He believes that it is incredibly effective at adjusting our circadian rhythms. Sometimes I think so many of these things would be easier if I lived somewhere warmer and sunnier, rather than in Wales where we’re more likely to have torrential rain or fog than sunshine! Maybe I need to try to incorporate this into my routine once the warmer weather comes or just move to the South of France – one day maybe!

Making the transition from work to home

As you may guess I have an evening routine as well. When I come home I get changed out of my work clothes and straighten the duvet now that the bed has had the day to air. Even if I work at home for the day or am there for the afternoon, I don’t get changed into my evening clothes until after I have logged off for the day. It is a psychological thing. Once I am in my tracksuit bottoms I am off-duty. I cook dinner, listening to iplayer, usually a comedy from Radio 4 Extra; some light-heartened entertainment helps to pass the time.

We are very unsophisticated and dinner is usually taken on our laps watching TV. We rarely have puddings and so we treat ourselves to a square of dark chocolate after dinner. I usually spend time on my computer, reading emails, catching up on social media and working on my blog. I also review the day and plan the next morning.

Bedtime

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Dr Day states that fundamental to establishing a good rhythm is to get plenty of sleep i.e. seven to nine hours. Me, I like to be in bed with my head on the pillow by 10.30pm. After computer time I may watch a little bit more tele if it’s not too late, but about 9.30/9.45pm I’m upstairs, doing my ablutions – as my other half calls them i.e. brushing my teeth, washing my face, etc. Then I spend 30 minutes reading fiction. By this time of day I am too tired to read a non-fiction book and immersing myself in a story about other peoples’ lives helps me to wind down before sleep.

Obviously there are days when this doesn’t all happen. At weekends I don’t always have my quiet time. Breakfast can be a very leisurely affair drinking coffee and doing a crossword. If I am going out for the evening there is no routine, but on the whole this is how life is and l love it.

Your Routine?

So what are your daily routines? Do you even have a routine? If not, have you thought about starting one? What would be your ideal routine? I would love to know.

If you are thinking about starting a morning routine I would suggest checking out the recent post by Radical Fire in which she tells you about ‘The Miracle Morning’ by Hal Elrod and how she has used that to shape her routine. It might give you some ideas.

If I lost everything

In response to Saving Ninja’s challenge, ‘If I Lost Everything’:

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If I woke up tomorrow and didn’t have anything because a cybercriminal had stolen all my money and assets, my other half wouldn’t be surprised as he meticulously shreds everything with his name and address on it and nags me about identity theft. I am rather more blasé.

Although my family live three hours away I know that there are local people who would let me bed down with them for a while. Three and a half years ago we moved to our current house in a village in Wales. Shortly after that one of our neighbours started a women’s group. This started as a monthly get together in the local pub for any women who live in the village and wanted to come. It has though developed way beyond that. We help each other out. Whether it is feeding cats, watering plants or putting on lunch for the village OAPs. It is a lovely feeling that there are people nearby who will always help you out, particularly when your family don’t live on the doorstep.

As well as my neighbours there are also friends, in particular ones from work. A group of us all worked together for several years in an office that has closed, but despite us now working in different places we all still keep in touch, albeit mainly virtually. Each Christmas we have a night out with the whole team, as though the office still exists. I know that anyone of them would give me a bed for the night.

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I am lucky that the only debt that I have is the mortgage and that isn’t excessive. I suppose though if I didn’t have anything, I would have the mortgage, but not the house. Fortunately I have a fairly well-paid job with an organisation which has a non-redundancy policy, so even if I had nothing else I would have my job and be able to start saving again as I earn. One of the difficulties is that I need my car to do my job, but I have a good credit rating so I expect I could get a loan to buy an old banger which would do me for a while until I could afford something better.

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In terms of food I know that I could live on beans and lentils for months. Having been a vegetarian for twenty years, now lapsed as I eat fish, I can make cheap and tasty meals. We love curry and so a few veg, spices, lentils and rice would keep us going. My other half, who is a meat eater would protest, but he would have to put up with it.

Even though they live in England, I also have family. I think that some of us take it for granted that if the worst happens we can always go back to Mum and Dad. In my job I meet people who don’t have any family, or at least not any that they would want to live with. Although for me that would mean leaving my current job I expect I could get another one where they live and go back to sleeping in my old room until things improve. Having jumped on the bandwagon of those responding to this challenge I have found it a useful exercise and it has helped me realise that no matter how bad life could be there will always be a way to sort things out. Even if it means some significant changes I wouldn’t be sleeping under a bridge in a cardboard box!