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Best Option

Richard Quinn

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.

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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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alpha omega
alpha omega
25 days ago

Super! Grandkids over money any day. We moved to Taxachussetts from NH to be around the corner from our grandkids, Heaven! I’m in Heaven!!

Cammer Michael
Cammer Michael
28 days ago

I enjoy reading humble dollar and I identify with so much in it. But the more I read, the more I realize how we’re both wealthy, by the terms of the gross majority of people, but also not really wealthy because we always have to think about money management. Being in the 95th percentile may not feel secure because the system, especially a healthcare issue, could take it all away. The skew to the 99th percentile is so unfairly large.

Last edited 28 days ago by Cammer Michael
R Quinn
R Quinn
28 days ago
Reply to  Cammer Michael

Don’t you think that with proper insurance, the odds of losing it all to health care, even LTC are pretty small?

Jamie
Jamie
29 days ago

The fact that the stock price has gone up since you exercised your options is not very relevant (in my opinion). Here’s how I propose you should think about it. At the time that your stock vested, if you had $150,000 in extra cash to invest instead of the stock options, would you have used that cash to buy your company stock (or to buy options for your company stock)? If the answer is no, then you were correct to sell at that time.

Jerry Pinkard
Jerry Pinkard
29 days ago

Nice article! It is hard to place a value on memories associated with family and time together. As they say, memories are priceless.

Joey
Joey
29 days ago

Nice article, this reminds me of Kevin Thompson’s recent HD post about how not to simply consider the buy/sell price of a home as the investment return (and, possibly, not thinking about a home as an investment at all).

https://humbledollar.com/2022/06/home-sweet-whatever/

steveark
steveark
29 days ago

I’m not casting stones since we are building a vacation home ourselves currently. But I do think we all look at the memories associated with the “good” decisions we have made without realizing we might have just as good a set of memories if we had chosen any of a multitude of paths. We could have a vacation house, or maybe a house boat, or maybe we could have invested in an RV and traveled to visit family more often, or funded family trips with the money or moved to locations near the kids, or had a condo near each of them if they live scattered like ours. I think if the intent is there to stay close as a family you’ll find a way. In your case the vacation home was a tool to achieve it but I bet had that not been an option you’d have very similar memories you made on some other path because you live an intentional life and have great priorities. But it sounds like you made a very wise choice indeed.

R Quinn
R Quinn
29 days ago
Reply to  steveark

Sure, there are many paths to creating lasting memories and you don’t need to spend a lot of money for that to happen. My main point was there are different ways to define and evaluate an investment. We are fortunate to live close to all our grandchildren and see most of them quite often and spending many weekends at their sporting events.

Olin
Olin
29 days ago

When I read articles on HumbleDollar, I’m always looking for the real humble message. One paragraph says it the best:

“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.”

Well said, “The memories are truly priceless.”

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