Best Option

Richard Quinn · Sep 6, 2022 · 10 replies

BACK IN 2005, MY employer was in merger talks. If the deal had gone through, I would have lost my job. I’d already received an offer of promotion to vice president. That made me eligible for an officer’s severance package that included, among other things, two years’ pay plus my full pension.

I was almost hoping the deal would go through, but it didn’t. Still, I was made a VP and worked another five years. In the middle of the merger talks, some stock options I’d previously received became exercisable. The prudent thing to do was to set aside the cash in case I lost my job.

Nah. Instead, my wife and I decided to exercise the options and put an addition on our vacation home on Cape Cod. We added a dining room, family room, a bedroom and a full bath. The budget was $150,000, but the reality was somewhat more.

When I exercised those options, the stock was $31.21 a share. Now, it’s $66.69, and a few months ago it hit $75. With accumulated and reinvested dividends, I estimate those exercised options would be worth more than $400,000 today. Instead, I’m sitting in the family room we added, writing for HumbleDollar.

Did we make a wise move? It all depends on your point of view. With all the improvements we’ve made to the house—which we bought new in 1987 for $159,000—we’ve recently been told it would sell for nearly $1 million. No, it’s not large and, no, it’s not on the water.

Lest you think that buying a house for $159,000 and selling it 35 years later for nearly $1 million would be a good investment, that’s not necessarily so. Over the 35 years we’ve:

Spent more than $400,000 on additions and on remodeling the kitchen and two bathrooms.
Paid $80,000 in property taxes.
Replaced a roof at a cost of $9,000.
Painted the house inside and out—twice—for $25,000.
Replaced gutters at a cost of $2,000.
Installed new windows, setting us back $7,000.
Replaced the deck—and we’re about to do that again—for $10,000 each time.
Installed central air and converted to gas heat from electric. We then had to replace both systems when the addition was built, for a total cost of $35,000.
Paid a service to check on the house when we aren’t here. That’s $35 a week.
Paid insurance and utility bills of about $300 a month.
Paid the landscaping service about $3,000 a year.

Still want a vacation home?

Back in 2005, we had one grandchild. Today, we have 13. We purchased the house for our family—first for our four children, and now for their children as well. The house is big enough to sleep 13 individuals’ worth of mass confusion.

One of the grandchildren has already expressed her hope that we’ll never sell the house. Only over my dead body, as the saying goes. The memories are truly priceless. There’s still a basket of toys in the family room from when the grandkids were toddlers. We can’t bring ourselves to remove it. We’ve gone from pushing the grandchildren on the swing set to playing a round of golf with them.

Meanwhile, I’ve gone from age 62 when I exercised those stock options to age 79, but it all feels like yesterday. There’s no chance we’d be happier with that $400,000 in the bank. Our accumulated memories have more value than any amount of additional assets I could imagine.

I did, however, exercise subsequent stock options, taking the shares instead of cash, and I’ve reinvested the dividends ever since. That will help fulfill my granddaughter’s wish that we keep the house in the family.

What’s on my mind these days? I’m hoping I can continue to drive the 300 miles to get here from our principal residence for many more years—or, at least, reasonably more.

Richard Quinn blogs at QuinnsCommentary.net. Before retiring in 2010, Dick was a compensation and benefits executive. Follow him on Twitter @QuinnsComments and check out his earlier articles.

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Best Option

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