This week on the Retirement Quick Tips Podcast, I’m talking about the 5 ways to ruin your retirement...and all have nothing to do with the economy, the stock market, social security, inflation, or interest rates. 

Today, I’m talking about how a vacation home can ruin your retirement. I live in Oregon where the crown jewel of the state is our endless miles of breathtaking beaches and coastline. Maybe Oregonians dream of owning a beach house. If I owned a beach house it would be in Manzanita - my favorite Oregon beach town. I would get a house perched high on the hill - just outside the tsunami zone where I can watch winter storms roll in my lookout tower…

Can you tell I’ve been daydreaming about my beach house? It may or may not have a yellow door and it definitely has a hot tub. 

Here’s the problem when you own a beach house or any vacation home for that matter. Many people buying a second home aren’t paying cash. If you can afford to pay cash for your 2nd home, it’s a bit different, but let’s assume you are carrying some debt on your house. You have the mortgage and the taxes and insurance, plus all the maintenance and repairs. Interest cost of the debt. I would hardly consider most vacation locales investments, because the housing prices don’t grow enough to justify it for investment purposes. Then there’s the decision of whether you’ll rent out your vacation home when you’re not using it - the extra wear and tear that will cause, and the net income after expenses that you can expect. 

And then there’s the big question of usage. Most people overestimate how much they will use a 2nd home. If you think you’re going to pack up and head there every weekend, or spend 6 months out of the year there, it’s best to try that out with renting first before you commit to buying. 

The point here is that the cost of ownership needs to be carefully calculated, and then you have to take it a step further and calculate your expected and realistic usage to see if it really makes financial sense and practical sense to buy vs. rent. If owning a 2nd home costs you $4000 for each week you’re there, because of how seldom you spend time there, but you could rent a place that’s twice as nice for $2000/week and none of the headaches of ownership, you definitely don’t want to find that out after you drop six figures or sign up for a 30-year mortgage for that beloved 2nd house. 

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast. 

----------

>>> Subscribe on Apple Podcasts: https://apple.co/2DI2LSP

>>> Subscribe on Amazon Alexa: https://amzn.to/2xRKrCs

>>> Visit the podcast page: https://truenorthra.com/podcast/ 

----------

Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance