- Does Gen Z Have it Harder Than Millennials? - November 20, 2023
- When To Pay Off Your Low-Interest Mortgage - November 6, 2023
- Reader Case: Can’t Work Because of Health Issues and Worried - October 23, 2023
The longer I write this blog, the more I realize that there are multiple, sometimes completely unexpected pathways to FIRE. What started off as a purely frugality-based movement has splintered and broadened into so many different sub-types it’s hard to keep track. Now you have not only traditional Fat FIRE and Lean FIRE, you have Side-FIRE (FIRE plus a side hustle), Nomadic FIRE (FIRE via travel), and even Van…FIRE…hmmm…I’m going to have to work on that one a little bit. Well, today I have a new one for you: Fur Baby FIRE.
What is Fur Baby FIRE, you may ask? Does it involve having kids with very hairy guys? Does it involve dressing up as an Ewok? Is it a weird sex thing?
No, no, and maybe, ya weirdo.
No, Fur Baby FIRE is FIRE via…Pet Sitting!
I know, I know, I was skeptical too, but weirder things have crossed my inbox. So without further ado, let’s see how one reader managed to pet sit her way to Financial Independence!
If you feel this is an interesting case study from a Canadian International House and Pet sitter, please share. Your thoughts would be greatly appreciated and save me some money with my therapist…LOL
I’m not sure if you will pay attention to this as I’m not in my 30’s but I have an interesting situation.
I’m a 53 year old single woman. I’m seriously thinking of pulling the trigger on FIRE.
Up until 5 years ago I lived in my primary residence for 20 years. My work contract ended & I decided to sell all my possessions and my car and take a year off and house and pet sit.
Currently I’ve been renting my primary residence for the last 5 years.
The house and pet sitting turned into a 5 year awesome adventure & now, I can officially call myself an international house a pet sitter, having house sat in Thailand, Malaysia, Indonesia, Ecuador, Panama, Mexico and of course my home country of Canada.
I have fantastic tenants (I’m so grateful) in my primary residence. The rent is $1456/month.
My 2nd home, I’ve owned for 7 years, and my parents have rented it all that time. They are fantastic, my Dad does things that improves the property (new deck, powder room upgrade, the house is always kept immaculately clean.) The down side is 7 years ago my parents and myself all agreed that they would pay me $900 per month rent to cover my mortgage payment and they would take care of everything else. Last year they put a new $8000 roof on the house, they pay all utilities, maintenance and upkeep. My responsibility is to pay the yearly property taxes ($3600 per year and house insurance $700 yearly) Their $900 rent no longer covers the mortgage and I have to kick in $50 per month. They are aware of this but there was no offer from them to cover it as they feel they improve the property out of their own pocket. I have to agree with this.
I have $425,000 between my RRSP & my TFSA.
Here is my dilemma. I’m seriously thinking of selling my primary residence. I purchased it 25 years ago for $80K. Now my real estate agent thinks it would fetch $350K! Covid is making housing prices skyrocket. I’ve done some research and I think she may be right.
I keep flipping back and forth between keeping the house and enjoying the renters passive income coming in OR selling the house and putting the $325K (the other $25K would be eaten up by lawyers fees and real estate commission 4% of $350 = $14K)
I’ve organized my finances so that the tenants $1456 monthly rent covers property taxes on both homes, insurance on both homes and gives me $800 per month to live on.
But if I add the $325K to my nest egg of $425K I would have $750K
It pains me greatly to think that I would have to continue to pay property taxes of $3600 per year on my 2nd rental that my parents live in out of this nest egg, but such is life.
Being an international house and pet-sitter, my only expenses are traveling to the location, food and entertainment. Over the last 5 years I’ve been able to shockingly live on $800 per month. Sometimes it’s a little more but most of the time it’s quite a bit less. I know this sounds crazy & your readers probably won’t believe it but it’s true as I’m not a partier, clothes horse, drug user or bar hopper.
My primary residence does cause me to lose a bit of sleep because it’s an old house. Last year I spent $3K repairing the deck, another $2K cutting down trees that threatened to fall on the house and I just put a $10K roof on the damn thing a few weeks ago. It feels like every time I get ahead just a little bit, a big expense hits me with the primary residence.
Also, I’ve NOT had to dip into my nest egg at all over these last 5 years.
I’m also wondering if I do sell my primary residence should I use $140K to pay off the mortgage on the home my parents live in and use their rent as a small income stream while I pull out $24K per year from the $750K nest egg. This is an over-estimation but I want to be safe in case I decide to not house and pet sit anymore and need to pay rent somewhere.
I would continue to come back to Canada every 6 months as I have many clients here and I want to keep my Canadian Health Insurance.
I should also mention that I started a new job with a small non-profit in November that pays terribly at $45K per year but does have a marginally ok benefit package but it’s not fantastic. Due to Covid, it made sense to work and sock money away to pay for the roof but as of this November, I’m headed to warmer climates to continue house and pet sitting and/or staying with a friend. My intention is to quit my job if they will not allow me to work from home (or anywhere for that matter) as I’ve been doing since I started with them in November.
In your opinion, do I sell my house and start drawing from my nest egg at the age 53 which makes me nervous or, do I continue to live on $800 per month, keep my tenants and enjoy this revenue stream?
I don’t believe I can count on my home increasing in value and I keep praying the septic system doesn’t crap out (no pun intended).
I’ve been going around in circles about this for the last 3 years but with home values going through the roof, could I be missing the opportunity to cash in?
My parents are healthy and happy and could possibly be renting my other home for the next 20 years at which point I will be 73!
I don’t know what to do.
Primary residence: $350K
2nd Residence: Paid $255K 7 years ago. Probably worth $550K now. $140K mortgage on this property.
2013 Dodge Caravan: $7K
Also, I’ve never made over $60K per year. I went bankrupt because of a failed marriage when I was 25 and lost everything… my house and my car and had to start completely from scratch. I have no kids.
I bought your book when it first came out 2 years ago and because of the crazy markets, I’ve been selling off my stock to take advantage of the gains (120%) and now want to invest in ZCN, VEA, VFV ZAG & BND. I’m thinking of a 70/30 split but finding this very painful to cope with and thinking maybe I should do 80/20 Equity/Bonds.
Your thoughts on this would be very helpful.
First of all, I wanted to highlight this…
I went bankrupt because of a failed marriage when I was 25 and lost everything
Yowza. She went from bankrupt to this as a single earner?!? That deserves a crazy-awesome high-five right there. Having something like this happen to you at such a young age and then having to rebuild everything from scratch must have been traumatizing, so good for you on getting through that. Not everyone would have been able to.
OK so on to the Fur Baby stuff. House and pet sitting is a whole subsection of budget travelling that I’ve been aware of for many years but never tried myself. Basically, house sitting is where you move into someone’s place for free so that you can take care of the house while the owners are away, and pet-sitting is when you’re also taking care of the owner’s pet at the same time.
What’s the catch, you might ask? Well, if you’re trying to use it as a way to get free/cheap accommodations while travelling, finding the right house sitting gig at the right time can be tricky. Remember, you’re taking care of the place while the owner themselves is travelling on holiday, so you often find a lot of house sits in weird locations and times, like in Canada in the dead of winter. So for that reason, we were never able to use it effectively during our travels, but if you’re able to string together enough pet-sitting gigs to fill an entire year, you could potentially use it to drop your living expenses down to almost nothing.
That’s what our reader has done, and why she’s able to live on a minuscule $800 a month. That’s impressive by any standard, and a big reason why she was able to really ratchet up her savings even in the middle of a pandemic.
However, her cleverness on the pet-sitting front is somewhat offset by the living arrangements with her parents. She owns a house that her parents live in, she still has to cover the taxes and insurance, and the amount they’re paying isn’t enough to cover the mortgage, so overall this is a cash-flow-negative investment property.
These situations seem like a good idea when you’re getting into it, but it almost always ends up badly. At best, you end up subsidizing your parents’ living expenses charging below market rent out of a sense of family devotion, and at worst your parents end up destroying the property and you can’t do anything about it because they’re your parents. An investment can turn into a trap very quickly if you can’t get out of it easily, and these situations almost end up in a trap because nobody wants to evict their own parents.
That being said, FurBabyFIRE seems to be OK with subsidizing her parents rent on an ongoing basis, so let’s just leave this house as is and see if it blows up her retirement too badly.
The Pet Sitting Life
What FurBabyFIRE has managed to do with pet sitting is really impressive. She gets to travel the world, live in other people’s houses, and drop her living expenses to almost nothing all at the same time. If she were to keep doing it in retirement forever, she’s basically FIRE now and then some.
But what if the pet gigs dry up and she has to go back to renting? That’s what we have to design her retirement around, the worst case scenario. If the pet sitting thing works out, great, but if it doesn’t the numbers still need to make sense.
So without further ado, let’s…MATH SHIT UP!
Currently, our reader’s non-housing spending is around $800. If she goes back to renting, we have to add that back to her living expenses. So let’s assume that she pays in rent what she’s currently charging her tenant to live in her house, which is $1456. Obviously, her actual rent may be higher or lower than this, but by showing how the math works our reader can rerun the numbers using whatever actual rent she ends up at.
So her new living expenses would be $800 + $1456 = $2,256 per month.
But her current tenant is (after expenses) providing her $800 a month to help pay for this. So her net living expenses is $2256 – $800 = $1456.
That means she needs an investment portfolio of $1456 x 12 x 25 = $436,800. Her current balance in her RRSP and TFSA is $435,000. So right now, her portfolio is just able to fund her retirement as is.
Keep The House or Sell It?
What about if we get rid of the house? Does that make her situation better or worse?
Well, if she sells the house, her retirement portfolio, after fees, will go up to $750k. But her income from her tenants will disappear. How does this affect her numbers?
We are still assuming her living expenses is $2,256 a month, but now there’s no tenants to help her pay for part of it. Additionally, she’s also on the hook for $3600 + $700 = $4,300 in insurance and property taxes on her other property (before, these costs were paid for by her tenant’s rental income).
So now, her annual expenses are $2,256 x 12 + $4,300 = $31,372, which would require a $31,372 x 25 = $784,300 portfolio to retire.
Hmmm, she needs $784,300 but she would “only” have $750,000. Getting rid of the house seemed to have made things worse! Could this be? Should she actually keep her rental property?
Pay off the Mortgage?
To answer this, we need to examine the last question she asked: If she sells her house, should she use it to pay off the mortgage on her other property?
If she were to do that, the $900 her parents give her that don’t even cover the mortgage payment would now be able to go directly into her pocket and help with her living expenses. Yes, her portfolio would decrease to $750k – $140k = $610k. But would the lower living expenses by enough to compensate for this?
Her monthly living expenses would be $2,256, but now we can use $900 from the parents to offset this, so her monthly would now be $2,256 – $900 = $1,356. She still has to pay the property taxes and insurance, so her annual expenses would now be $1,356 x 12 + $4,300 = $20,572, which requires a portfolio of $20,572 x 25 = $514,300.
That would be comfortably supported by her new portfolio size of $610k.
So there you have it. Now, admittedly I took a wild stab at what her rent would be if she stopped pet-sitting, so if FurBabyFIRE has a better number, then she should feel free to plug her estimated rent into the three scenarios herself.
That being said, as the numbers stand, of the three options, she can either leave everything as is, or sell her rental house and use the proceeds to pay off the mortgage on the house her parents live in and both would work out just fine for her. Personally, I’d do the latter because it makes your retirement much safer, and it’s one less house you have to worry about.
But if you do this, make sure that you don’t tell your parents you paid off the mortgage, because then they just might stop paying you rent because “you don’t need it anymore.” Buncha freeloading Boomers.
So there you have it. What would you do if you were in FurBabyFIRE’s position? Would you keep the houses or get rid of them? Let’s hear it in the comments below!
Hi there. Thanks for stopping by. We use affiliate links to keep this site free, so if you believe in what we're trying to do here, consider supporting us by clicking! Thx ;)
Build a Portfolio Like Ours: Check out our FREE Investment Workshop!
Travel the World: Get covid-19 coverage for only $45.08 USD/month with SafetyWing Nomad Insurance