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EVERY TIME I HEAR the sage advice to pay off a mortgage before retirement, I wince. Not only will I have a mortgage in retirement, but also I won’t even make my first payment until after I retire—just as my salary plummets to zero.
I hate going against the conventional wisdom. But I really have no choice. As an active duty military officer who, for the past 20-plus years, has had to move every few years, it’s been difficult to build home equity. The upshot: Our family of seven will be starting from scratch—at least in the housing department—when I retire in a few years at age 51.
Back when I was in dental school and periodontics residency, my wife worked fulltime at a bioenvironmental firm in San Antonio earning $32,000 a year. That was just enough for us to buy a starter home in 2002 for $94,000. We sold it four years later for $120,000 and thought we’d struck gold. At my first military assignment in Colorado Springs, Colorado, we purchased home No. 2 in 2006 for $140,000, giving no thought to the fact that we’d likely be moving again just a few years later.
I hadn’t yet heard the recommendation to avoid buying a home unless you can see staying put for at least five-to-seven years, and preferably longer. Our departure from Colorado in 2008, during the housing market crash, meant bringing money to the closing when we sold our home. As a junior Air Force officer, the $25,000 check I had to write was devastating. Although my wife and I could have hung on to the house and rented it out, the idea of becoming long-distance landlords wasn’t an attractive one.
We assumed we couldn’t possibly be unlucky twice in a row, so we purchased our third home in 2009 for $225,000 at my next Air Force job in Texas. But four years later, I was again writing a check at closing—this time for $12,000—because we were selling for less than we’d bought. On my relatively low salary as a military periodontist, twice shelling out that kind of money was unwelcome and stressful, especially when combined with our student loans, two car payments and variable universal life insurance premiums—all rookie mistakes and stories for another day.
Those expenses, in turn, caused us unwisely to delay investing in the federal government’s Thrift Savings Plan and in our IRAs. I swore I’d never buy a home again until I was out of the Air Force. We’ve stuck with that plan, for better or worse.
When I received orders for my next assignment in Albuquerque, there weren’t many suitable homes available for rent, so I wrote letters to the owners of homes I admired on Realtor.com, stating that—although I couldn’t afford to buy their home—I’d be glad to rent it for two years. A number of folks wrote back, enthusiastic to take me up on my offer, so we rented in New Mexico for two years. That was followed by another home rental for one year in Montgomery, Alabama.
Next, we had the pleasure of moving to Italy, where we rented for one short year in Aviano, not too far from Venice, before I received orders to head to South Korea, where we lived in a home on Osan Air Base. Now, we’re finishing a four-year lease on a home in the Washington, D.C., area, and preparing to move back to San Antonio. There, we plan once again to rent for four years, before I’ll pull the plug and retire after 24 years of active duty.
If you’re doing the math, the numbers are: nine homes (three owned, six rented), three continents, two foreign countries and… home equity of exactly zero dollars. Perhaps unsurprisingly, this is not unique for those of us who move every few years, although I’ve known many military colleagues who have taken the opposite approach. Not only do they purchase a home at every new location, but also they keep each one and maintain an inventory of real estate as long-distance landlords. They’re probably smarter and more financially savvy than I am for doing it that way. There’s a part of me that’s a bit jealous and regretful that I never followed that strategy, but I just don’t have the stomach for it.
To make up for our lack of home equity, my wife and I have taken the approach of living far below our means—a difficult task in a family like ours with five children—and pouring roughly 40% to 50% of my income into our investments. We have a fairly simple three index-fund portfolio, with a total U.S. stock market fund, a total international stock fund and a total U.S. bond market fund. We also have 529 college-savings plans, which are similarly invested.
Between our investments, my military pension and our eventual Social Security benefits, we should have enough to pay for the kids’ college and our other expenses. The Post-9/11 G.I. Bill and Texas’s Hazlewood Act will cover two kids’ college, plus my oldest received a full-ride scholarship. That means our 529s will only need to cover two of our five kids.
While my projections suggest we’ll be on solid financial ground when I retire, there remains that frustrating future expense—our looming home purchase. Sure, we could be lifelong renters. But like most Americans, we dream of finally owning a home that’s truly ours for the long term. Even the three homes we’ve owned never quite felt like our own because we always knew we’d be moving soon, so we never took the time to update, remodel or make them uniquely ours.
By the time I retire, we’ll have about $100,000 set aside for a house down payment, although part of me is enamored with the idea of paying for the home in its entirety, despite the huge tax bill that a large withdrawal from our taxable brokerage account would trigger. Will we go that route? It’s something I need to look into.
When does it make sense to buy a home? Offer your thoughts in HumbleDollar’s Voices section.
Casey Campbell is an active duty military periodontist and a homeschooling father of five. He and his family currently live in Northern Virginia. The views expressed in this article are those of the author and shouldn’t be construed as official or as reflecting the views of the U.S. Air Force or Department of Defense.
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Thank you for sharing your experiences and I think you’ve done a remarkable job. Thank you also for your service.
My various abodes have been a journey. I too travelled extensively for a period of years, sometimes spending consecutive months in a hotel/motel room. 30 days at a time wasn’t unusual. 45 days was my longest overseas stay, 5 days the shortest. All for business. My longest single stay was 11 months; another was 5 months duration. While I travelled, I maintained an apartment near company headquarters.
I initially rented an address which was formally my domicile. First with my parents but eventually an independent apartment. It had been helpful to rent from mom and dad as the income was very much needed. Because I was never there it was not an imposition for them.
As my father approached retirement their financial situation had improved greatly. I left and rented elsewhere, still travelling extensively.
I married at age 30 and we lived in my apartment for two years. We wanted a family and a house in a small city seemed to be a good choice. We chose the city my spouse preferred. Two years after marrying we purchased a fixer-upper. That added to my work load. However, at the time real estate was going through one of those periodic booms and I couldn’t save fast enough, so desiring to put down about 20% I had no choice but to buy less on a larger property. A larger down payment got me better terms and a shorter duration mortgage. Over a 10 year period I put in a lot of sweat equity, hired an architect and a builder and added substantially to that house. I changed careers to significantly reduce business travel while the children were growing.
The children left for college and I lost the house in a marital divorce. The ex demanded it, but sold it at a nice profit two years later as a tear-down. The builder replaced it with two large upscale homes (brick & stone exterior, etc.). In a bit or irony they were given new addresses. Any evidence of that home was completely eradicated.
That was a good lesson to me about the impermanence of sticks and bricks.
I relocated to a new city and it was back to apartments for me. I again altered my career and business travel and hotel living increased, some was overseas. Over the next few years I moved a few times. It was easy as my personal possessions were slight.
I remarried and we lived in apartments, saving for retirement and a house, although I wasn’t too eager. We discussed this and decided anything purchased would be with the intent to live there for 10 years, or more. I was doing business travel and my spouse had some serious health issues. We decided on a condominium because that would mean minimal exterior maintenance, no snow shoveling, etc. It was again a real estate boom but we found a large HOA (a private urban development) on two small lakes, with three man-made streams, 15 acres of turf, 800 trees and extensive walking areas. Each condo was in a 4-unit building with interior garage. Cost was $149,500 although fees were about $220 a month and there were real estate taxes, too. The first thing I did was gut the kitchen while we lived in the apartment. My spouse had great concerns and wouldn’t agree to buy it unless I did that. I had told her “I can fix that”. I stripped it to the walls, broke open one of the walls and for about $10,000 replaced everything including adding extensive maple cabinets, new floor surfaces and appliances, and a larger water heater. All codes were adhered to. Eventually I did other upgrades and replaced carpeting with hardwood floors, etc. I hired a pro firm for the floors. I did both baths, and the upgrade to the master included new cabinets, new faux waterproof “wood” floor and plumbing and cost me only $1,500 out of pocket. Sweat equity is a real thing. BTW I hate to do plumbing.
We lived there for 20 years and sold it a couple of years ago at an excellent price. For a time, we were full-time RVers and I conducted business while on the road. Because of health issues, G had retired early.
We had set up two “lily pads”, travelling between the condo and them. One in Michigan and another in Arizona. We put stationery RVs on each and travelled in a class B, once living in it for 90 days. One of the stationary RVs was a 30 ft. travel trailer, think of it as a cabin with an extensive deck, etc. The other a 41 ft. 5th wheel with 5 slides, 1-1/2 baths, etc. Both were in professionally managed facilities. Our travels were between campgrounds with good bath facilities, etc. Think of our Class B RV as a motel room on wheels.
When I became incapacitated by health issues it became impossible to travel and living in an RV was also not possible because of my limited mobility. For a time we lived in an ADA compliant hotel room while we looked for a suitable house. The hotel expenses forced a quicker decision.
Today we live in a 50+ resort community with extensive amenities. We found a home in that community and purchased it. We sold the 5th wheel RV. But we retained the “lily pad” in Michigan.
After two years of treatment I am far more mobile. This year my medical leash was lengthened, and it is probable we’ll live in Michigan for a couple of months this summer.