Reader Case: Lean FIRE or buy a ski studio?

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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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