I’ve waited to publish this post until everything was very much official, and now it is. The paperwork is signed. The listing is online. There’s a big honkin’ sign in our front yard.
Our house is officially for sale and on the market. And we obviously weren’t afraid to break the rules (however unofficial they might be) in the playbook of smart financial moves to get it there.
A House Is an Expensive Thing in the Short Term
When you think about home ownership, there are a few qualifications you need to meet in order to make owning a better deal for you than renting. One of the biggies is that you should plan to live in your home for at least 5 to 7 years.
Why? Because on average, that’s the amount of time you’ll need to break even on the initial costs you paid to get into your home. Buying (and selling) houses is seriously expensive, and closing costs alone cost thousands of dollars of cash out of pocket.
Not to mention, you can only take advantage of the capital gains tax breaks on any profit you earn in selling your home if you’ve lived in it for at least two years.
Well, we’ve been in our house for more than two years. Barely. We made it to the halfway mark of the recommended 5-year stay, at 2 and 1/2 years, before we decided to head on out.
But don’t worry — we had good reason to break the rules.
We Break the Rules… When There’s No Reason Not To
As I’ve discussed in past blog posts, we got a ridiculously good deal on the house we bought right before we got married. The housing market in our area was still struggling and it was a serious buyer’s market.
That allowed us to get into a home we would have never been able to afford in normal market conditions. We jumped on the opportunity as an investment, figuring the market had no where to go but up.
It helped that the sellers:
- Did a considerable about of maintenance and repairs before listing (like installing a new A/C unit)
- Came down $15,000 off their original list price
- Put in about $2,000 worth of work into the property (like limbing up trees and fixing a few minor problems) before we agreed to buy
- Paid about $5,000 in closing costs
…and this was on top of the $20,000 or so they had to pay at closing because they were so underwater on their mortgage.
(Let that be a warning to anyone who thinks a home is an investment. It is not. It is a place to live and you better not overextend yourself and borrow more than you can really afford!)
So we got an amazing deal and were out no cash beyond what we put on our down payment.
And the market in our area has gone a little bananas recently. Just 2 and 1/2 years after we bought, our home’s estimated value is just $5,000 below the highest it’s even been valued at.
Meanwhile, other kinds of properties not in our area have not rebounded so quickly. These properties happen to be the kind we want: homes with acreage away from the metro Atlanta area. As a plus, interest rates on mortgages are still mind-bogglingly low.
Combine all these factors, and heck yes we’re breaking the rules when it comes to home ownership:
- We’ll walk away with enough cash from the sale of our home, after paying broker commissions and paying off our existing mortgage, to fund 20% (or more) of the down payment on our next home
- We get to continue to take advantage of historically low interest rates with a new loan
- We can sell our house in a seller’s market, but not have to worry about buying into the same skewed market (because properties that we’re looking at now are a little more balanced, with buyers and sellers on more even footing)
No, we haven’t lived here for 5 to 7 years, and we haven’t even found where we’ll be moving to yet. But there’s no reason not to cash in on our investment right now.
We’re going for it, because the rules were made as general guidelines. Our situation is far from general or typical. It just makes sense to break the rules a little bit.
Becoming a Sensible Rule-Breaker
Why blab on about the sale of our house?
Well, for one because it’s my blog and I’ll blab if I want to. And thoughts about the goings-on with this in my life right now have consumed nearly every waking second of my day for the past two weeks (and quite a few seconds of my night when I was supposed to be sleeping, dang it).
But more importantly, because it illustrates something that I’ve been doing with increasing success since I became an adult.
My first attempts at breaking the rules failed miserably. While the motivation came from the same independent streak that has served me well in the past five years, I hadn’t quite learned to channel that desire to run rampant through all of society’s strictures when I was a teenager.
The results were often quite bad, to the point where I literally can’t remember whole periods of my high school years when I try to recall them because I’ve (sub?)consciously blocked them out. The upside is I managed to remember the lessons learned from those experiences.
But as an adult, I’ve managed to develop a more refined ability to tell when a general rule in life is not right for me and my situation. I’ve become logical, reasonable, and sensible in my rule-breaking.
For us and the house, there was little to no downside to selling the house. It’s merely the next step in the process to living a life that means something to us.
And that’s how you develop a sense of which rules to break, which you should just bend a little, and which ones to heed.
You get clear on what you want your life to look like. You sit down and have a heart to heart with yourself about what you value, what you prioritize, and what you want to accomplish. You must define what’s purposeful, meaningful, and worthwhile — and then you work to attain it.
Not all the rules out there are going to fit with what you want to do in that grand life of yours, especially if you prefer getting a little farther away from the beaten path. And that is perfectly okay.
Just don’t dismiss advice, guidance, or rules outright. When you seek to break a rule, you should do so only after careful consideration and evaluation of your situation. Make sure you’re not doing the financial or career equivalent of cutting off your nose to spite your face. (In other words, breaking the rules just to say you broke the rules.)
After all, rules become rules for good reasons (when we’re referring to rules as general guidelines). They’re established from the experience of others who have gone before us and learned important lessons about what works, what doesn’t, and why.
Forging Your Own Way (with Your Own Rules!)
I fully encourage you to try bending a rule or two if it means working your way closer to a life well lived.
In your finances and in your career, that might mean:
Ruthlessly prioritizing what you value.. and cutting everything else from your budget. This may mean you do things a consumerist society isn’t comfortable with, like driving a 15-year old car, thrifting for parts of your wardrobe, or simply not spending money on stuff you don’t care about so you can spend on what matters to you.
Saving and investing large portions of your income. Don’t you dare let the general rule of “you should save 10% of your income for retirement” make you think you can’t save more. You can! In 2014, we were investing 40% of our income. We’re closing in on 50% now.
My friend Cait from Blonde on a Budget has an excellent post around this issue, about how general rules of thumb could be killing our savings potential.
Spending some of your free time earning extra money instead of watching hours of TV. This one tends to make people even more uncomfortable than the idea of not spending thousands of dollars on crap you don’t need — because using the time available to you to get out there and boost your income (and your skill set, and your experience, and your confidence in what you can achieve) means there is more out there. It is possible to do more with your money and your life.
But it takes a good deal of work, and most folks simply aren’t willing to take responsibility for what they can control. It’s easier to just show up than it is to take action and bust your tail to change your situation.
Quitting your job to strike out on your own. Of course, there’s more to breaking the general rule of “be a good employee” than deciding you’ve had enough and quitting your job tomorrow. But if you want to try freelancing, or working as a solopreneur, or launching your own business, that’s awesome!
You should pursue this goal of yours and prepare for an epic rule-breaking. (Which means side hustling while holding down your day job for a while to build your business, your self-employment income, and your experience in running your own show.) When you’re ready, don’t be afraid to break away from the conventional or traditional to try something new in your work.
Sometimes, you should break the rules. When it makes sense for you, it can lead to some incredible experiences and opportunities in life.
Have you bent or broken the “rules” before, with a positive outcome? Are you struggling to figure out which rules make sense for you to break? Tell me about it in the comments below!