a planter's garden

[plantingtheseed]

The art of house buying
continued


Therefore, in my case, there is very little risk to carrying a mortgage debt.

The biggest hurdle to any mortgage debt, is the risk of loss due to a disruption of income. The presence of a "callable" lifetime fixed income contract (pension), largely eliminates this hurdle, so long as the post cash flow is balanced.

If, for whatever reason, the lifetime income source is somehow nullified and the mortgage debt obligation cannot be met, then a declared homestead will preserve at least $300,000 toward the next home purchase for 6 months, provided that equity exists.
https://www.stimmel-law.com/en/articles ... amily-home

In an event of a loss of the primary residence through a short-sale, foreclosure or otherwise, barring the presence of any junior lien, the presence of one-action rule and security first rule will largely shield and in most cases completely shield, other personal assets.
https://www.nolo.com/legal-encyclopedia ... osure.html


Furthermore,

in conjunction with homestead and anti-deficiency statue in California, COVID has brought forth a federal extension of Qualified Principal Residence Indebtedness (QPRI) Exclusion on canceled mortgage debt of principle residence up to $750,000 until Jan. 1, 2026.

Taxpayer Certainty and Disaster Tax Relief Act of 2020
Exclusion from Gross Income of Discharge of Qualified Principal Residence Indebtedness (Section 114)

The Act would extend the exclusion from gross income of discharge of qualified principal residence indebtedness to discharges occurring before January 1, 2026. It would also lower from $2,000,000 (MFJ) to $750,000 and from $1,000,000 (single) to $375,000 the amount that may be discharged.

https://rules.house.gov/sites/democrats ... 116-68.pdf (page 4902 of 5593)


This means that any deficiency income triggered through a short sale or a foreclosure is exempt from taxation at federal level for up to $750,000 until Jan. 1, 2026.

But apparently, not at the state level - https://www.ftb.ca.gov/file/personal/in ... elief.html


To be continued...

[plantingtheseed]

Continued...

Timing


The recent increase in California homestead exemption nudges the scale in favor home ownership.

That means whatever happens, there will be a portion of home equity (300k+), protected, in an event of foreclosure or bankrutpcy.

This is similar to 401k protection under ERISA and a much larger asset protection extension (covering IRA, non-401k retirement accounts, public pension), under BAPCPA bankruptcy protection.


Another aspect to consider, is the IRC Section 121 exclusion, or the home sale capital gain exclusion up to 250k/500k (Single/Married).
https://www.nolo.com/legal-encyclopedia ... usion.html
https://www.irs.gov/taxtopics/tc701

So in essence, having a home, could end up producing tax free income up to 250k/500k, if the stay is long enough and the tide of the real estate market is favorable. It would be ideal to live in a desirable neighborhood and to check the home prices once in a while.

I've been noticing more and more price cuts on housing prices as of late. My guess is that some folks may know something that rest of us do not.
I'm not a rocket scientist, but a low fixed interest rate AND price would be an attractive combination for a buyer.

This more aligns with my preferred approach of leisurely wealth building with limited risk. It's a single act, but with a chance at yielding multiple benefits. Not all of the benefits have to pan out. Having a place of your own, is probably enough for most of us.


The snowball effect, all begins with successfully making that first snow ball and letting things build around it.

I first succeeded at getting an education, which led to a job. The job led to savings, pension and social security. ERE led to even more robust savings.

Any one of them, should be able to stand on their own. And any one of them, can become that first snow ball, to generate the snowball effect - sometimes even while mitigating risk.

[plantingtheseed]

House hacking and... JADU's?


Found another rabbit hole to delve into.

So far, the adventure has been about the cost of living recapture through the use of a dwelling unit, which is a necessary component of living and understanding some of the rules that would help this purpose.

Enter JLC's article (FU Money) - https://jlcollinsnh.com/2019/11/21/the- ... -strategy/

I've had roommates in college before, so I began playing with the idea a bit, and concluded that perhaps an in-law unit might be the best way to handle some of the shortcomings of actually living with a stranger for some additional icing on the cake income.

Began researching insurance ramifications, code compliance requirements and such things, when I came across:

https://www.hcd.ca.gov/policy-research/ ... nits.shtml

CA has a known housing shortage, mainly due to high cost. Am I in the right place at the right time? Is there a diamond in the rough?

Planning to spend some time looking in and to see if there is something here.

[plantingtheseed]

..

[plantingtheseed]

13 Minutes: January 6 Video Montage

Went for a walk after viewing. Came back, took my gift cards and...


To those that have forsaken this country - this is my answer.



Thank you for reaffirming my resolve and bringing forth clarity.

There is no longer any doubt in my mind as to who we are and what we do.


It is not the fact of liberty but the way in which liberty is exercised that ultimately determines whether liberty itself survives. --Dorothy Thompson

[plantingtheseed]

Dreams Never End

https://www.youtube.com/watch?v=zrh5kaWfyMQ
10-13-21 San Francisco, CA

[plantingtheseed]

After all these years... They've still got it.


I feel the need for harmony
And I look around, but it's not what I see
I see angry faces looking at me
And I want to know what makes them so
For this world can be a dangerous place
But it's all we got, and it's quite a lot

Take a look at yourself
You may not be the same as everyone else
You're just different, and that's okay
We all follow our own way
And if you find that they won't listen
Then they've got nothing to say
So don't get mad and don't feel sad
Be a rebel, not a devil
(Be a rebel, not a devil)

There will come a day
When your fear and self-doubt fades away
Because you have achieved what you need
There's no doubt in your heart
Not a care
It's a funny affair

Take a look at yourself
You may not be the same as everyone else
You're just different, and that's okay
We all follow our own way
And if you find that they won't listen
Then they've got nothing to say
So don't get mad and don't feel sad
Be a rebel, not a devil

[plantingtheseed]

The siren song


Had a 3 month reunion luncheon with an ex co-worker who had recently retired after almost four decades of working.

This person had managed to max out just about everything there was to max out, netting around 9k per month after taxes, not counting social security.

Typical of the area, despite the high income, this left about 1k per month after all the expenses, including (of course) the mortgage.

After we exchanged our goodbyes, found myself mulling over the idea of a retirement with almost no compromise and no risk, as the numbers floated around in my mind.

There wasn't really any particular reason as to why I couldn't retire the same way, and a quick calculation showed that this could be achieved before a "normal" retirement age in the early 60's.

Perhaps another 8 years or so. I wouldn't even need the pension, as by then the accumulated savings alone would be more than enough to sustain my life.

Looking back, I wasted too much time worrying money, because I've always managed to get by somehow. Sure there were tough times, but I thank the Almighty for the grace that I really do not deserve.


But perhaps THE question that I keep asking is, what would I would with that TIME?

There would have to be a purpose and a reason good enough to make this change. The problem is that my job is very fulfilling - it's an interesting, endless challenging puzzle that provides ample opportunities for expanding one's skills.

There is ample creative control, and satisfaction in utilizing one's education and acquired skills for initiatives that benefit the community in general. Of course there are downsides too, but over all, it's fun being an engineer working for the community.

I suppose I have matured in my career along with the journey in ERE.


Sometimes it's the drama, the weight of the grave responsibilities that come across occasionally, that provides the ultimate and satisfying adrenaline rush.

Those days and nights spent thinking about different solutions and when you finally solve the puzzle that lead to a successful outcome, there is nothing else like it.

Would I keep doing what I am doing if they didn't pay me? That would have been an easy answer eight years ago. It's not such an easy answer now because I understand the significance of the job better.


Traveling, hobbies, volunteering, having fun and spending money, all seemed like a no-brainer in a different time, but that perspective must now be weighed along with additional dimensions of understandings and experiences since then.

In the grand scheme of things, is it really just about the self?

[plantingtheseed]

End of the Journal. (updates only from here on out)

02/17/21 SUM 906.5k = Savings (cash) 767k + Current Market Value: Equities 13.1k + Options 126.5k