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Today’s reader case jumped out at me from the subject line, mainly because it might be the most Canadian reader case I’ve ever heard. Don’t believe me? Check it:
Hello Firecracker!
As a fellow Canadian, I really love your book and blog where I can find not only US centric insights! I am in my mid 30s and on track to reach my FI number of 600k in a year or so with 522k investments in index funds.
Once I reach 600k, my original plan is to continue working to save up 1 year expenses in cash so that I could see it as a 1 year sabbatical test and take time to unwind and pursue other things (wood working, music composing…). I have always been able to earn small cash via side hustles that I enjoy like teaching piano.
I love snowboarding and live for powder days! I currently live 40 min to a local hill but have an opportunity to buy a ski studio for 400k at a great mountain (better snow and better terrain) and I wonder if I should seize that rather rare opportunity.
The experience of being ski-in/ski-out sounds very appealing to me but it would put me back years from achieving my 600k FIRE goal as I would make a 20% downpayment and double my current rent.
Property taxes for this unit would be about 4k per year with $165 monthly condos fees so it would be an additional $500 per month to add to the mortgage.
I work remotely making 140k/year and also enjoy mountain biking in the summer so I plan to live there all year round and would not intend to rent out the unit unless I am later travelling abroad for long periods.
Me and my partner don’t want kids and we share rent and expenses but I would be the one buying the ski studio (my partner has a little studio abroad and doesn’t want to take the risk of another mortgage but is onboard to share the costs of living up to $700 (our current rent per person) if I were to buy it).
Other than my index funds investments, I have no debt and no real estate so this could be my retirement home so that I am not priced out of the mountains that I enjoy in the future.
If I were to buy the ski studio, I would continue working until I pay off the mortgage before continuing to pursue FIRE. The unit is 30 min from a hospital (for later consideration) and comes with an underground parking. We have a paid off car that is in great condition.
Alternatively, I could save up above my 600k FIRE goal without buying real estate to feed my snow powder obsession. I just worry that one day I won’t be able to rent anything near the mountains with all the prices going up.
Here are my average monthly expenses:
- Rent: 700
- Phone: 14
- Internet: 50
- Spotify: 12
- Groceries: 200
- Eating out: 45
- Car Insurance: 50
- Gas: 100
- Entertainment: 50
- Ski: 200
- Travel : 200
- Equipement: 100
- Misc: 50
- Provisions for future needs: 200
- Total: 1971
My current rent is linked to my partner’s work and when we stop working, we would need to rent another place probably closer to $2000 so $1000 per person (Good places in British Columbia are expensive). So having a good place to live in close to the things we enjoy (skiing and outdoors) is a plus.
What are your thoughts on whether just FIRE in a year or so, or buying the ski studio and have a place to call home in the future, securing a place for old age close to things we enjoy?
My partner is very into geo-arbitrage and I would be onboard to live abroad like in SEA for half the year to minimize our spending when we FIRE. My biggest worry is not to be able to find a good place to rent later on when we are older and don’t have jobs/employer income. But maybe in the age of AirBNB and VRBO, this is silly?
Thank you for your time and help, really appreciate your insights!
See what I’m talking about? Hmm, keep going towards FIRE, or blow a bunch of money on real estate, specifically a ski studio. It’s almost painfully Canadian. Or maybe Swiss.
Anyway, if you’re not from a country that’s covered in snow, you’re probably wondering what the hell a ski studio is. Is it a studio on skis? No, but someone needs to make that because it sounds freaking rad.
A ski studio is a chalet you can rent (or in this case, own) that’s attached to a ski resort. We stayed at one with my family years ago, and admittedly, they’re a lot of fun. For some reason, they all look like some variation of a snow-covered log cabin, and the really cool ones let you ski right up to them, so you can go right from your doorstep to the slopes with no steps in between.
Would I own one? No, but it’s for the very personally specific reason of “my wife f*cking hates skiing.”
It combines 3 of her most hated things: Snow, admission, and smacking her head. I decided in my infinite wisdom to take FIRECracker to Blue Mountain one time when we were dating, and after painfully rolling down a Blue Square hill she decided to spend the rest of the weekend in our hotel’s hot tub detailing in excruciating detail all the reasons why skiing is stupid. After reason #48 I had resigned myself to the reality that we will not be owning a ski studio any time soon.
What This Will Cost
We know that this ski studio has a sticker price of $400k, but that’s just part of the cost. It will also inflate her living expenses on an ongoing basis, which means it makes her FIRE aspirations that much harder.
Her current monthly expenses are $1971 a month, or $23,652 per year. That puts her FIRE target at $23,652 x 25 = $591,300. Her current $522k in liquid investments do put her within a year or so of retiring, so she’s in good shape to hit FIRE.
If she were to buy the ski studio, though, this would take $80k out of her portfolio, setting her back to $442k.
It would also add a mortgage, which at today’s 5-year fixed rate of 3.99%, would be about $1700 a month. Her partner would contribute $700 of that, so her cost would be $1000 a month, plus property taxes and condo fees of $500. She should also take into account home insurance costs of $100. That takes her monthly spending to $1971 – $700 (old rent) + $1000 (new mortgage) + $600 (taxes, fees, insurance) = $2871 per month or $34,452 per year. This has a knock-on effect of raising her FIRE target to $861,300, and lowering her savings rate to $106,000 (net income) – $34,452 = $71,548.
So how long will it take at her current savings rate to hit this new, higher goal?
| Year | Balance | Savings | ROI | Total |
| 1 | $422,000.00 | $71,548.00 | $25,320.00 | $518,868.00 |
| 2 | $518,868.00 | $71,548.00 | $31,132.08 | $621,548.08 |
| 3 | $621,548.08 | $71,548.00 | $37,292.88 | $730,388.96 |
| 4 | $730,388.96 | $71,548.00 | $43,823.34 | $845,760.30 |
| 5 | $845,760.30 | $71,548.00 | $50,745.62 | $968,053.92 |
A little over 4 years.
Using Cash
However, we do have another option. What if we cut out the mortgage entirely and just buy the ski studio now with a sackful of cash? That would take an even bigger chunk out of her portfolio, obviously, since it would reduce her savings all the way down to $122k. But, it means she wouldn’t have to worry about a mortgage.
She still has to pay property taxes and condo fees, but she would save on her current rent. Put this all together and it takes her monthly expenses to $1971 – $700 + 600 = $1871 per month, or $22,452 per year. This makes her FIRE target $22,452 x 25 = $561,300, and her savings rate $106,000 (net income) – $22,452 = $83,548. That would put her FIRE projection to be…
| Year | Balance | Savings | ROI | Total |
| 1 | $122,000.00 | $83,548.00 | $7,320.00 | $212,868.00 |
| 2 | $212,868.00 | $83,548.00 | $12,772.08 | $309,188.08 |
| 3 | $309,188.08 | $83,548.00 | $18,551.28 | $411,287.36 |
| 4 | $411,287.36 | $83,548.00 | $24,677.24 | $519,512.61 |
| 5 | $519,512.61 | $83,548.00 | $31,170.76 | $634,231.36 |
Again, a little over 4 years, so at first glance that didn’t help much. But things can be improved more if we factor in the fact that the money her partner would have contributed towards the mortgage could instead go to her directly. After all, if he’s not going to contribute towards the ski studio, it’s only fair to ask him to pay rent. That $700 would reduce her living expenses to just $1071 per month, or $12,852 per year. This changes her FIRE target to $12,852 x 25 = $321,300, and increases her savings rate to $106,000 – $12,852 = $93,148, which puts her retirement at…
| Year | Balance | Savings | ROI | Total |
| 1 | $122,000.00 | $93,148.00 | $7,320.00 | $222,468.00 |
| 2 | $222,468.00 | $93,148.00 | $13,348.08 | $328,964.08 |
Just over 2 years.
Conclusion
This reader case is as much a lifestyle design question as much as a financial one. Yes, the idea of buying a place in the mountains and skiing all day sounds pretty awesome, but is that something that you would enjoy doing for the rest of your life? If something happens that prevents you from being able to snowboard (like an unexpected illness), would you still be happy living there?
Our reader also mentions geo-arbitrage and possibly living in multiple places in the year. If that’s the case, owning a property directly impedes your ability to do that, because nobody wants to deal with a leaky roof from 1000 miles away. And she describes a partner that would share her costs, but we don’t know how long-term this relationship is. If they break up and that $700 monthly check goes away, she will be forced to un-retire in order to keep affording the place.
All these are questions that can’t be answered with a spreadsheet. Buying this place does put her retirement plans at risk, especially with her being so close to the finish line already. But now that we know exactly what this decision will cost her in terms of money and time, she will need to answer the question: Does she love the idea of living in a ski lodge enough for it to be worth the cost?
Only our reader can answer these for herself.
Edit: While I was writing this article, the mere mention of skiing has caused FIRECracker to flash back to just exactly how much she hates skiing. So this has been my entire week so far.
Me: *Tries to work on article*
FIRECracker: *taps shoulder* Oh, and another thing I hate about skiing. The ski boots. They’re too heavy and hurt my feet.
Me: *sigh*
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Snow… it’s cold!
There would be a second advantage here financially. It would force her to have a bigger and more diversified nest egg because it would keep her in the work force for another 4 1/2 years while she builds up her savings and/or pays off the ski studio. In effect she would have a financial “cushion” above and beyond her original lean FIRE approach.
I love this article, and I think if the relationship is sound, reader should strongly think about going for it. The value on a place like this is likely to go up if it ends up not working for them in the end, but it seems like they love skiing/nature enough to stick it out there for a good long while. The maths work if using cash/having partner contribute a little to expenses. OP could also get a roommate if things go south there. There’s never enough affordable housing in ski towns.
I also wouldn’t worry AS much if they AirBnB it and something happens- people are able to fix problems all the time, you can get a property management company, trusted neighbor, etc. Half the issues you are going to need to simply call someone about and you can do that from anywhere these days.
I would ask OP other questions:
How far is their partner from FIRE and what are their plans with it?
Which expenses are likely to go up if they move? I’m guessing mountain town prices on various things (food, gas, utils) are higher than wherever they are now, though could be wrong.
What would happen if their job somehow was no longer remote?
Mostly writing this as a vote of cautious confidence for OP, since it’s outside the box thinking and I bet a lot of other readers are not going to get it.
Good job on the article. Good options for the Reader!
I’m from Michigan, and our family went skiing most weekends. I was lukewarm, until I was injured and spent a weekend inside the lodge, drinking peppermint patties next to the fire, and watching two broken legs coming down the mountain. I became a big fan. . . of sitting next to the fire and drinking peppermint patties.
You are too funny!
$200 a month on groceries ?? What is she eating, cat food? I spend 5x that just on myself.
I also retired early for the purpose of skiing and mountain biking fulltime. So I understand the motivation here. But snow is fickle, and skiing and biking in new places is fun. So I’d keep the cash invested and travel around to chase the snow. Unless they move to a world class mountain an
Where the need to ski elsewhere isn’t really needed. But 600k won’t buy them a parking spot in a world class resort. So keep the cash and travel is my vote.
You nailed it !!
I think what you said was really insightful!
It’s depressing, isn’t it, to think that 600K doesn’t even get you a parking space in a posh ski resort.
I live in Switzerland, and the situation here is equally dire.
I can consider myself FIRE, but that kind of life-style will be forever out of my reach (contemplating 600K for a parking space I mean).
FIRE for me means having an apartment and a 1MIO Euro passive portfolio to live from, and that suits me just fine.
But what if your dreams are to mingle with the fancy people in ski resorts and party on yachts?
I guess what I mean to say is that FIRE with anywhere between 0,5 to 2 MIO will allow you – depending on your wants – to live without the need of having to work in a cubicle, but what if you do want to taste from all luxuries this world has to offer, and drive fancy cars, drink expensive champagnes and eat in 4 star restaurants? Then simply aiming for FIRE and a normal job will not cut it, you will then need to significantly increase your income.
Being a great saver and investor won’t do, you’ll have to be an above average earner.
Anyway, that’s nothing new, it’s been thoroughly described towards the end in Firecracker’s book.
Kudos for your book by the way!
Best regards, Paul
I am at partial fire-
I am older, and I love my house.
Yes, it has been a bit of a pain, repairs and such.
House has 5,500k balance to go. I paid it off in 20 years and am now 60.
I traveled a lot in my 30s and saw the overseas lifestyle. So I could compare.
Yes, my house, and other family care-giving issues slowed down my Fire goals but I think the journey detour is worth it.
So I vote for the ski chalet. Buying it aligns with the writers life goals, its well thought out plan,not an impulse buy, and the writer is Fire capable.
( make sure the HOA is solvent!- hate Hoas. they are the bad part of the deal.)
Living out of a suitcase is not for everyone.
Hi!
As a fellow Canadian, I understand wanting a ski cabin!
That being said, Millenial Revolution always do their calculations with one goal in mind – FIRE number, but not looking at final net worth.
In that last scenario, you may be ‘technically’ FIRE, but your cash would only be 328 000$ (plus the value of your condo).
Personally, I would be much more comfortable having 500 000 or 600 000 aside and paying a mortgage, especially if you eventually think about renting out your cabin (for which you can deduct costs, mortgage interests being a cost). Especially if taking out all the money would mean selling now (market is low) and losing on whenever the market will rebound. It all depends if you think you will gain more by avoiding the mortgage ‘cost’ or the return you will get on financial markets (who knows)?
Maybe also think of the ‘seasonality’ of your plan. When would you go to SEA – summer or winter? If you go during summer, it might be harder to rent your cabin, and some places are in typhoon season there.
So while financially you have a couple of options, I think talking with your partner of your lifestyle, and then adjusting might help see which solution makes more sense.
And depending how much you love/hate your job, working for another year or 2 (especially with the current inflation) to get that nest egg in a comfortable place, then taking a sabbatical and seeing where things are seems like a good way to make the best of both worlds.
Good luck!
Best,
Jessica
I love the way this article was written.
One life rule I have is not making decisions based on perceived scarcity.
To me, it would freak me out to pull the trigger on this location just due to the possibility of limited options in the future.
My Wife and I have adapted the mentality that achieving our FIRE number is a necessity to achieve ASAP. Anything “nice to have” must wait until the necessity of FIRE is met.
This is just our approach and not necessarily correct! It sounds like both options results in them having freedom in sub 5 years!
I wonder if there’s any maintenance or assessments that come up as a result of harsh weather. Also, I wonder how liquid these ski chalets are (I know absolutely nothing about skiing). Do they sell easily or are they more like timeshares, where you’re stuck with them for life ?
I say continue on a fast sprint to FIRE, and as part of their geo-arbitrage spend a couple months at their favorite ski facility each year.
Oh Man! Great analysis. I think she should definitely buy the place. Not getting any younger and it’s her passion…and if she buys it, and then gets injured, can always sell it (probably at a profit). She can look at where she’s at in 2 years (relationship wise and financially) and then decide whether to stop remote working. But definitely take the jump for this while young!
What about the tax ramifications of withdrawing $400K from her investments to pay cash for her ski condo? Seems to be a pretty important step that was omitted.
Climate Change! Will there be any snow at this ski resort in 20 years? I wouldn’t bet my future on this.
Also, I don’t recall reading where her money is invested. If she has to pull any funds from an RRSP to make the purchase, she’ll need to withdraw about 45% more to cover the tax bill as the withdrawal will be deemed by CRA as income added to her $140K earnings.
Both are great options! However, as a fellow powder enthusiast I say cutting the 40 minute commute to your morning dose and having a chance to live your dream is worth the extra 2 years of working. And if you change your mind later you can always sell it. If it feels right, I say go for it!
I lived in Breckenridge, CO for seven years and nabbed 100 – 130 days on my snowboard every single season, just slaying it. And I had the luxury of splitting time at Keystone, Vail, Beaver Creek, etc. Even then, Breck started to get old after a while. Do you think you’ll enjoy ripping a single mountain non-stop for the next 30 years? Dealing with clueless tourists and idiotic jerries gets quite old after a while as well… just throwing some intel out there from someone who can relate and has lived the life. You do only live once and you’re killing it on the financial aspect of things, kudos for sure. And mountain properties will always be marketable regardless of RE market conditions… so if you’ve lived that life for a while and you’re over it, just sell and part ways (like I did!) – Money isn’t end all be all like so many FIRE enthusiasts portray. Follow your heart and do what makes you happy… 🙂
I’m going to throw my two cents worth in here and ask a question: Why do you want to be F.I.R.E?
“… my original plan is to continue working to save up 1 year expenses in cash so that I could see it as a 1 year sabbatical test and take time to unwind and pursue other things (wood working, music composing…). I have always been able to earn small cash via side hustles that I enjoy like teaching piano.
I love snowboarding and live for powder days!”
This sounds like it’s one of your passions and you point out later that if you don’t take this opportunity, you’ll be spending money on rent to get up the mountain later.
My point being that I would hope that you’re not amassing a nest egg as part of winning a numbers game with your bank account. You’re trying to buy the freedom to do the things you want to do with your time. If snowboarding is what you want to do with your time, then spending money on something you value can and should be part of your retirement strategy.
Will it set you back a few years? It looks like it, but if the ski studio doesn’t work out for whatever reason – health issues, breakup with your partner, etc, then those are problems that WILL have solutions in the future – and with some extra years of saving, you’ll still be in an excellent position to solve them.
So, the question really boils down to – what do you want to do with your time? My best advice? Flip a coin. When it comes down, really sit for a moment with how you feel about what the coin says – if the coin says ‘no,’ and you’re immensely disappointed, then you’ll know that this studio is something that you really do want. If you’re relieved, then you know that it’s not that important to you.
Really knowing what you want will make this decision easy for you, I think. In the meantime, I wish you the best.
I love the coin flip trick for figuring out what I really want in a tough situation! If you’re arguing with a piece of metal, then you’ve already made up your mind and are just looking for justification. Life is too short, and it’s perfectly fine if the deciding reason is “because I want to”.
re: “Flip a coin. When it comes down, really sit for a moment with how you feel about what the coin says – if the coin says ‘no,’ and you’re immensely disappointed, then you’ll know that this studio is something that you really do want. If you’re relieved, then you know that it’s not that important to you.”
This is EXACTLY the same thing as my standard advice of making a list of pros and cons. If the list of cons is greater than the list of pros and you are bitterly disappointed by that, then you know you really, really want to do that thing despite the fact it looks like the cons outweigh the pros. 😉
My wife also dislikes snow sports. It’s cold and wet and expensive. I hurt my knee once and it never really feels the same. So I’m not a huge fan anymore either. I’d say just rent when you want to go ski. But that’s just me. We’re building a beach cabin in Thailand, though…
I remember seeing a movie a long time ago where a group of friends go on a ski holiday. One girl didn’t ski, so she put a fake cast on her leg so she could just hang out at the pubs, lounge around, tell stories of how she ‘broke’ her leg and generally get sympathy from the the guys at the ski resort. So a suggestion to you: Wanderer can go skiing, whilst Firecracker lounges around with a ‘cast’ on her leg.
He has done right by investing in Index funds. The ski studio will bleed money..and won’t bring in any money. It’s not an asset – period. If he wants to pursue his passion for skiing, he can travel to other destinations during snow season… and thus see some new places. That’s a better alternative compared to dealing with all the headaches associated with the studio (when he’s in town or out of town). Hope he ditches his studio dreams, focuses on his passion + side-hustles, and continues to invest in Index funds.
Firecracker – I think ski boots are too heavy also! 🙂
“probably closer to $2000 so $1000 per person (Good places in British Columbia are expensive”
LOL. Starting rent for an inconvenient, older condo in Whistler is about $4000 up a month. Good luck, keep your job earning money as inflation will take most of it in the future
The $200 grocery bill is so impressive! Hahaha…life goals. I wonder what you get for that amount?
I really understand the “I just worry that one day I won’t be able to rent anything in a place I love” worry! I’m 2-3 years away from being able to retire if I sell my condo and live nomadically (assuming it’s actually possible to do that on 35k/yr, something I won’t believe until I go on sabbatical and try it) but as that day gets closer, I get closer to chickening out! What if after a few years I decide nomadic living isn’t for me, and then can’t find a rental in a place I want to live that fits into that tiny budget? I currently spend 35k/yr even though I
own my condo outright. Australia, where I live, is going through a rental crisis (largely because the pandemic eviction moratorium caused landlords to give up and sell), even people with big budgets and good references are having trouble finding rentals, so I really don’t like my chances with a small budget and no references
I am retiring in 3 weeks. Just sold my house in Auckland and retiring on $25k/yr. I had the same fears as you, what if I can’t afford a house if nomadic life does not work out for me or $25k is not enough. But than I figured its better to take that risk now when I am 37 instead of when I am 47. I will know in 2 yrs if nomadic life is for me and if isn’t I can still come back and have 10 or so more years to find an alternative lifestyle, house and job.
A couple of points:
1) There seems to be some FOMO going on. Fear about houses being unavailable in the future is part of the current overheated market. Don’t let it influence decisions.
2) Remember that FIRE planning errs on the conservative side. We talk about 4% as a safe withdrawal rate, and the majority of the time things go a lot better than that. It’s quite likely that your portfolio will grow considerably over time. So you could choose to keep your focus on your original FIRE number goal until you cross the finish line, have two or three years of fun in early retirement enjoying lots of travel, and then if you’re getting bored and in need of a new project – then that’s the time to revisit the ski lodge idea. Paying cash. From your big surplus (hopefully). …And if there isn’t a big surplus, because the market went south, you’ll be glad you played it cautiously.
If you go the continue rent route – I’d definitely beef up your future rent figure. Only factoring in your current $700 as your long term rent projections seems very iffy to me. If you do by the place, factor in taxes if you are withdrawing money from various accounts to fund the down payment (or overall cost if you buy it in cash).
Personally, I’d keep renting but go a more flexible route where you try out a different ski town each winter and a different international stay when not skiing. Not sure where in BC you are, but I’m going to guess forest fires a likely not too far away and could derail your long term thoughts on skiing in that one location forever.
Skiing is not like cycling, skiing needs certain winter weather …because cycling can be built into daily living and if one is hardy, cycling on certain winter also.
Skiing only works for a few months of year. So area needs to be great in summer-fall. Spring..well sorry the ground is wet/soggy for awhile and not as enjoyable hiking in the mountains.
I live 100 km. away from Canmore, a mountain resort town by Banff National park. We’re in Calgary. Our snow in Banff National Park..is fabulous of snowsports: the snow is drier, and tons of it. But our winters can plunge to -20 to 2-30 degrees C. on certain days. I understand the beauty of Canada’s beautiful mountain resorts..we are further north than Colorado. 🙂 National athletes train in our area. https://cyclewriteblog.files.wordpress.com/2019/10/snowshoeingtowards-lake-louise.jpg?w=768&h=1024
Mid-3os hey. I was about early 40s when I started caring less about frequent snowboarding, especially with the crazy increases in lift ticket prices. How remote is the ski hill and how far away from other things and people you like? I think if you don’t think you would last in that property for 10 years its not worth it for all the real estate fees you will have to pay to resell later, and its guarateed the condo fees will increase over time, especially if this place is quite new now. Stay free and flexible.
I used to live in Colorado and also hate skiing/snowboarding. Hurts my feet and once you get good enough at it where you’re no longer falling and sliding down the mountain, it’s just super cold being out there for 8 hours (my friends would all stay for 8 hours and I usually bum a ride off them).
That said, I feel like for me even if I loved doing the whole ski bum thing a lot, I wouldn’t risk all the effort building up to retirement just so I can ski. Seems like even on leanFIRE, one could just buy a season pass and ski to their heart’s content much less than the cost of a lodging.