Howdy y’all!! It’s a new year and things are getting back to normal. It’s a new normal and a new routine, but we sure are loving every minute.

It’s getting downright cold here in north central Texas! It’s moments like this where we do not miss living in our RV. Plywood and fiberglass was never conducive to a warm environment in freezing temperatures. The only thing worse than a full shitter would have been a frozen shitter. Yuck!! Thank god that never happened to us!

When we published our last blog our financial situation was clear as mud. We didn’t know how much we were paying for the house we built and already living in! We knew the cost of the construction, but that was only the starting point. None of the details had been finalized and they kept changing which made a frustrating situation even worse.

Our situation was somewhat unique because we don’t have jobs and we live off of our investments. So that created additional hurdles that we had to clear for financing. Then it seamed that those additional hurdles triggered more hurdles and more questions. It was so annoying!

There was a point where we almost said “fuck it” and paid for the entire project out of pocket just so we wouldn’t have to deal with people anymore. We understand there is a process and banks need to cover their bases, but most of this was just repetitive nonsense. It served no actual purpose in the process above what was already done. It was very frustrating!

Couple all of that with the financial gymnastics we had to pull off just to get to that point and the fact we had living in a hotel for two months! By the time we moved into our house we were mentally shot.

After a few weeks we finally got all of the financial stuff relating to the house squared away. Once that was done it allowed us to reassess and revise our budget. That was kind of a shocking moment because not much changed. More on that later, but after that process was completed we had some decisions to make.

So here is where we are at after this long and winding road. Let us preface this by saying we are not financial experts, obviously. I am literally “average Joe” in name and all. Throughout this process we admittedly made mistakes. We also had to make a lot of quick decisions from a distance. Some of those decisions were great and some were not so great. We did the best we could with the information we had at the time.

Despite the challenges everything turned out perfectly. We did it and we couldn’t be more happy with our decision to move into a house.

So with that said, let’s get into the financial stuff. This is where everything got very complicated and I will just say right out of the gate, we did what we had to do to close the deal.

First of all, selling our RV absolutely threw a wrench in our plans financially. We took a large unplanned financial hit which started a domino effect. The second domino to fall was the construction loan interest. Due to the weather delays we ended up forking out quite a bit more than we budgeted for.

The weather just would not cooperate and the bank was the beneficiary. The worst possible time for bad weather is when you get towards the end of construction. All of the funds have been drawn and you are paying maximum interest. Typically it’s not a big deal because it’s the end of the road and should be over quickly. Well, for us it turned into a few months. Which means months of the bank inflicting maximum financial pain instead of weeks. To compound that problem we had already moved to Texas. So on top of the bank interest we got stuck paying for a hotel for months instead of a couple of weeks.

After navigating through these hazardous financial waters we came to the point of closing the deal. We blew through a load of cash so we needed to be open to other options to get it done. This meant drawing funds from a Roth IRA and using a one time penalty free home purchase option from another IRA.

It certainly was not the ideal way to complete this process. The next domino to fall will obviously be the tax consequences of these decisions. But, that’s why we pay a very intelligent person to figure that stuff out. The best case scenario is that all of the interest paid offsets any tax burden incurred. Or at least gets that burden down to a palatable level.

It’s been awhile since we posted any numbers so we will just skip to the year end. There is no point in bridging the gap because everything was so screwed up for the last few months. Now that all is said and done here is where we finished 2024.

Our Portfolio Year Ending 2024:

Portfolio = $1,469,392

Portfolio Increased By $41,039 or 2.87% From The End of 2023 

Net Worth = $1,699,103

Net Worth Increased By $118,547 or 7.50% From The End Of 2023

After all of the crap we went through and all the money we had to fork out, we still managed to come out ahead for the year.

December was an awful month for the markets. Our numbers dropped over $60k for that month alone. It’s amazing that we came out positive for the year with the amount of money we laid out and a horrible year end.

So that begs the question, are we still financially independent? The answer is yes-ish. After putting together our new budget we were surprised to see that our new budget isn’t all that much different than our prior budget. We really just substituted our RV and campground budget for a mortgage. The real difference will be property taxes. Luckily, Texas has some programs to mitigate property taxes and we just happen to qualify for one. We are not exactly sure of our tax rate until that all gets processed and no payment is due until 2026 anyway. We will cross that bridge when we get there.

However, this is where we had some decisions to make. As we said, our budget isn’t all that much different from what it was before. Even better, our investments out grew our home build expenses and we ended the year with more money than we started. Heck we even added a house and have home equity on top of it! On paper money isn’t a problem.

The real problem is that our cash situation was decimated. For the past four years we never really had to touch our actual investments as we always had cash available. Our plan was to use that up before tapping any investments. That has now changed with what happened over the last year. While we still have a good amount of cash, we are near the low end of our comfort level.

As such, we are moving to a new phase of our early retirement. This phase involves using IRS Rule 72(t) to start drawing from pretax accounts. The downside is we will be locked into these withdrawals no matter what for a number of years. Our accounts will also essentially be locked in during this period. No further funds can be added and we can only deduct what was calculated for Rule 72(t) or we will get penalized. The upside is that we will have planned withdrawals each month. Based on the calculations it will more than cover our expenses and even allow us to build up some cash again. Once we get more “cash comfort” we can reinvest any overage into a different taxable investment account.

I know some people will frown on this move. Other’s will question our ability to stay retired long term. They might be right which is why we don’t recommend doing anything we do. It might not be right for your situation. For us, the math works out for our comfort level and risk tolerance. Sure, that could change. If for some reason things go south then you can catch me between 8AM-5PM M-F at the local Tractor Supply or Home Depot.

Until then we are going to enjoy life every day on our property. After all, that is why we retired early in the first place. It’s also why we are not going to just give it up unless we absolutely need to. We worked too hard to get to this point.

Plus, life is good and we will have crops to tend too!

Happy Trails!

Joe

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