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If you’ve been laid off due to COVID-19, you are not alone. Hundreds of thousands of people lost their jobs because of the economic crisis caused by the pandemic. This sucks! I feel bad for all the people who got laid off. I feel terrible for my co-workers and friends, all the bright people who got let go. I know exactly how they feel, as I’ve been laid off myself. I am not a victim and don’t plan to stay without income or rely on a government to buy me food. I am a young, smart and healthy man. I’ve been through a lot and certainly prepared for the times like this. As I pull myself out this hole, I want to help others. How? I’ll write. I will write about the actions I take, thoughts I have to live the trace behind me for other to follow… or not.
My friend, you just “got kicked in your balls” pretty hard. The head spins from Whys and Ifs. Future is uncertain, however, there are few things that I can tell you for a fact:
Your life will change dramatically from now on. Things will never be the same.
You will feel uncomfortable.
You will have put the work to stand back up.
You will need to step over your ego and ask for help.
Realize, that thousand of people are in the same boat as me and you. Realize that NOBODY, I repeat, NOBODY knows what to do. We all just got equalized. This is not the finish, this is a start. The second you got your last paycheck, the gun went off.
“Take a break, you’ve been working so hard for so long. You deserve some time off.”
That’s an option… for someone else. Buds, we’re a different breed. This is not an option for us.
“You’re young, you’ve got a lot of time. Relax.”
The first part of this statement is true – you are young, however, I disagree with the second piece. You have no time! There is no time to waste on goofing around, blaming the virus, your employer, and feeling sorry for yourself. Life is just too great to waste it on those things, the world is too big to sit still. Take action!
Easy to say, but what exactly do I do now? Where do I even start?
Sit down, let’s brainstorm. You are not alone and I will help you figure things out. I don’t have all the answers, but I know the direction. I will help you clear things up and bring more clarity into your head.
First things first: Food and Shelter
You need something to eat and you need the place to live. It all costs money, therefore the first step for you is to run some numbers and make financial projections.
Financials. How long will you last?
Your bank account is not the flowing steam anymore, it’s a pond. There is no income coming in, so the pond starts to dry out. If you don’t change anything financially, it will dry out completely, leaving you broke AF. It’s not even a question if, but when. Know the exact date.
You have some savings, how much? Put together all the cash saved from different accounts. Know exactly how much you have on hand.
What are your monthly expenses? Go to your bank account and pull all the charges for the past three months. How much did you spend a month on average? What were the top 3 expenses? Know the numbers.
Run financial forecasts. Experiment with different scenarios. See the example below for $100k saved. It shows how long you will last with this much income at different expense levels:
Calculations won’t be accurate without accounting for inflation. Not many people are aware of, however, this silent sucker takes the money out of your pocket at the rate of 2.27% (May 2020). Because money is not backed up by gold and the government prints it like crazy -> inflation will rise and your $100k will worth less as you go. The worst part is that this number is expected to rise over the next few years, moving the date of your bankruptcy closer at a higher speed.
At the current Inflation rate, your $100k will worth:
2 years -> $95k
3 years -> $93k
4 years -> $90k
6 years -> $86k
8 years -> about $80,000
Over the course of 8 years, you will lose at least $20,000 due to inflation. Of course, the number will fluctuate, however, don’t expect it to be much lower and prepare for the opposite.
Time is money, so how many months of living will the inflation shave off?
2 years -> ~3 month
3 years -> 6 month
4.2 years -> almost a YEAR!
8 years -> ~ 4 years…
As you can tell, the numbers grow exponentially…
Know your numbers
Play out different scenarios
A dollar today > A Dollar tomorrow
By holding onto your cash, you lose money daily
You need to find a way to put this money to work, where they at least don’t lose in value over time
If you don’t take action and change anything, your pond will dry out faster than you think. You will go broke
So what do you do now?
Immediate Action Steps
Minimize your expenses. Cut down your expenses and stop spending your resources on anything you can’t eat and/or does not have direct implications on your health
Cancel all you travel and vacation plans (if you had any)
Review your grocery bracket. Only necessities
Do you REALLY need the car? Consider selling your vehicle. This will eliminate car insurance payments, gas, and amortization expenses. If you can’t live without one, get yourself something cheaper. The old beat-up sedan is an excellent choice.
Lower your rent payments. Downside. If you are renting, this is probably one of the biggest expenses on your balance sheet. Can you move to a cheaper place? How can you minimize the monthly payments? No matter what you do, don’t move into the basement. I’ve got more on it here: 6 Months in Basement. It is not worth the savings! Lessons Learned.
2. Make a Long-Term Plan. Sit down with a pen and lots of paper. You need a plan! Three major questions you need to answer:
How do I develop several streams of income?
How can I get out of deflationary assets (cash)?
How can I make a living with only the internet connection?
3. Execute Immediately. Stand up, wash your face, and get to work!
What Will it Take to Create Such Passive Stream of Income?
So you want to be financially free you say? Ok cool. I want to be an astronaut. There is a gap between what I want and what I have. I am about to make you feel uncomfortable by asking straight questions and telling you the things you don’t want to hear.
To begin with – you are currently not “financially” free. Just because you say you want to be free, I assume that you are currently not.
“No-no. I am free. I just want to have more freedom” – I hear you say.
Alright, let’s define freedom. Merriam-Webster Thesaurus gives two definitions of freedom:
1. The state of being free from the control or power of another 2. The right to act or move freely
According to the first definition, freedom is a state of being. Also, it assumes that there was some sort of power or another person who was trying to control the one. Question: is the controlling force necessary for being or becoming free? If not, then definition should be the following: freedom is a state of being. Much shorter and simpler, isn’t it?
The second definition states that freedom is the right. Alright, what is the “right”? Google defines it as justified, acceptable, true, or correct as a fact.
My next question is: who is the one that justifies and defines what is acceptable, true, and correct?Who has the authority to extend you the right to be free? I personally don’t know anyone authorized to grant the right to be free. However, I know that the judicial system claims to have the right to limit or take away your freedom by putting you in jail or restricting you from doing certain things and being in certain places. So if there is no-one to ask for freedom, do we get it by default, at birth? Or maybe we need to obtain it somehow, somewhere? It’s confusing and neither of two definitions brought clarity into explaining what freedom is. Maybe other sources have better explanations.
Roget’s 21st Century Thesaurus says that freedom is the license to do as one wants and defines the following as the synonyms for it:
So freedom is a license. To be free, I need a license. Again, who is authorized to issue the license to be free? Does anyone know what it looks like? What are the requirements for obtaining one? Does it have an expiry day? How much does it cost? Again, the more I ask, the more questions I get? Let’s move on. Maybe if we try from the opposite end of the spectrum, we will be able to get to the truth.
What is the opposite of freedom? Below are the antonyms for freedom, according to Roget’s 21st Century Thesaurus:
Dependence and captivity… According to this definition, freedom is some sort of independence from some external force or power. Therefore to be free means to be in a state of independence. Let’s leave it as is and not dig deeper because I feel it’s a rabbit hole that has no end to it. Independence.
Impotence, inability, weakness…? This is ridiculous. Are there better ways to describe the lack of freedom? Let’s ask Google, he knows everything:
Every person has his own magic number that will change everything and unlock the way to a beautiful, stress-free, happy life. Ha-ha… Anyways, let’s say you need about $5,000 /month to live comfortably, cover all your expenses. You strive to create a passive stream of income of $5,000 /month that will require little to no work from you. The money will simply land on your bank account while you lay on a couch and repost on Instagram the quotes about successful success. With this money, you don’t worry about where the next paycheck will come from. You think you outsmarted the entire world around you and the sky is not a limit for you. You figured it all out and now you are able to manage your time only as you decide to. No bosses, nowhere to go, nothing to do, only unless you decide otherwise. That’s cool? Sure it does.
You heard a lot of “success stories” in which people obtained that financial freedom or financial independence I should say, by investing in real estate. People often start their stories remembering the times, when they busted their asses at work, trying to squeeze as much cash as possible from their full-time jobs. Then savvy folks would pour all their savings into the rental properties for the monthly cash flow. By cashflow I mean the income you have left, after the mortgage, taxes, and other operating expenses. You hear a lot of stories like that and it seems that real investment is a way to go. You will need to build a portfolio of rental properties, which generates your passive income. Now you see the path. Pull up the pants, wipe your runny nose, grab the diet Coke – we are going to get FINANCIALLY FREE.
How much time do you think it will take you to set everything up? What did successful stories tell you about the timelines? Let’s see what it takes to build the stream of income that will generate you $5,000 /month.
“People who make $90,000 a year, actually earn more than 87% of the U.S. population.”,
(Keshner, Feb 4, 2019)
Let’s say you are an educated, hard-working middle-class citizen, who annually makes approximately $100K. Day in, day out from 8 to 5 you grind your way to success working the full-time job. Your life is simple, you don’t overspend and have pretty good financial behaviors that allow you to set some money aside. You saved quite a bit and you are ready to step on the real estate investing path. You are about to buy your first property and already feel like a complete success. Life is great and easy, you figured things out. Everything goes as planned. Few months of house hunting and you finally bought your dream house. A bit of renovation, marketing and you have the tenants moved in. The house brings you about $500 a month of hustle-free cash flow. You feel on top of the world, you nailed it. Indeed, that’s great cash flow. To become financially free you only have left $4,500 /month. No problems, just repeat what you’ve done 9 more times and you can retire. The only problem is that you are out of cash after your first purchase. It’s hard to buy a property without a downpayment. Let’s do some napkin math to see how much time it will take to buy 9 more houses and get your freedomlicense.
If you are fortunate to live in Canada, please pay 27% taxes on your annual income. Taxes are a whole nother topic, which deserves separate attention. However, stay on the track, we are not getting into taxes here. Deduct the basic expenses from your annual income. They are different for every person (I don’t include the stacks of toilet paper you purchased during COVID-19 pandemic. Let’s keep it as your little secret). Deducting :
Food (one person)
Entertainment (movies, 1-2 nights out, nothing crazy, really conservative)
Pet (a small dog shares miserable existence next to you)
Commute ($7-10 /day)
Car insurance payments
Rent (So cheap because you try to save money and live in a shithole. It also includes utilities)
Travel (Once a year you fly out to a warm country. You work hard, you deserve it (sarcasm))
You don’t buy new clothes, toys, electronics, gadgets. A new iPhone is just a dream you can’t afford. No Christmas or birthday presents to yourself. Cancel Netflix and Spotify subscriptions. No kombucha or Starbuck coffees. No cab rides. You don’t pay for that cute chick at the bar, sorry honey. No new books or journal subscriptions. You don’t get sick. No dental treatment, no out of pocket medical expenses. You live a monk’s life, literally. From 8 to 5, day in – day out. You have a goal and you are committed to achieving it no matter what it takes. You’ve decided that you want to be free and this is the way to get that freedom. The napkin math showed you clearly – 10 houses – $5,000 /month.
A year later you saved $40,000. You look a little tired, but that doesn’t matter. Well done boy! Now let’s put this money to work and buy a second house. You’ve found a beautiful property listed for little over $300K and your ass got lit on fire. You expect to add another $500 to your monthly cash flow. $1,000 a month, doing little to nothing. No kidding, sounds great, let’s pull the trigger on it. A typical down payment is 20%, which equals $60,000 on a $300K house. What a bummer, you can’t buy it, because you have only $40K saved. You will need to work another six months to make up the difference. You realize that it takes approximately a year and a half to put aside enough money to buy a $300,000 property. Don’t forget that you will need to live the monk’s life and say no to anything that you can’t eat. How long do you think it will take to save up enough cash for ten of those $300k properties? Do you think you will still want that freedom by the time you reach it? By the way, how long do you expect to occupy this planet? Silence…
Ha-ha! Exactly! Don’t freak out yet… Such variables, like appreciation rate and investment income will make things look slightly better. Let’s add them to the equation.
According to Remax: “Healthy price increases are expected next year, with the RE/MAX 2020 Housing Market Outlook Report estimating a 3.7 per-cent increase in the average residential sale price.” According to the Royal LePage Market Survey Forecast: “The aggregate price of a home in Canada is forecast to rise 3.2 percent year-over-year to $669,800 in 2020”.This is a conservative number and it greatly varies, depending on the area of your purchase. We will use it for our financial projections. The number of 3.7% means that the house you purchased for $300,000, next year should increase in price for about $11,100. Will put appreciation to the side for now and run the numbers only including the rental income.
I assume you are being a good boy and don’t touch the monthly $500 you get from your rental property. You are not selling the house, therefore we don’t account for appreciation and use only the money you saved from the monthly cash flow. Annually the rental generates you $4,380 ($6,000 minus 26.8% tax deductions). This extra cash will save you about 3 months of hard work at your full-time job. You will need to hassle for 16.2 months (70.4 weeks) to save $60,000 of a down payment on your second house. (It’s almost 2 months faster having the cash flow of $500 /month from the first property).
One year and a little over 4 months, since you’ve become the landlord, you pull the trigger on the second property. Now, you are the happy owner of two properties which generate you (hopefully)$730 / month ($1,000 /month minus taxes) on top of your annual savings of $40,000. You continue living on the edge of starvation for another year and six weeks to save enough money to purchase your third house. Same deal, $300,000 purchase price, $60k downpayment. Rental income from the two houses you already own allows you to set aside $60,000 a little bit faster. To be exact, 2.7 months faster since the purchase of your first house. Great job, you’ve got the third house. All three properties bring you $13,140 in cash flow annually which correlates to $1,095 /month. It’s been a while since you stepped on this RE journey. Let’s do a quick check-in. How do you feel living the way you did? Because you were able to save $40k every year, I assume life has been very steady for you. No emergencies, no unexpected expenses. You didn’t get sick, nor met a loved one. No kids were born and your parents stayed healthy and well. All your tenants paid on time. No convictions. The vacancy rate is down to zero. No maintenance expenses, whatsoever. What a stress-free life! By the way, how long did it take you to come to this point, where you build such a passive income stream of “whopping” $1,095 /months?
2nd Home = 16.2 months 3rd Home = 14.8 months
Time Spent =31 months = 2 years 7 months
For the past 2 years and 7 months, you lived like a monk. Skinny, tired, but determined to make it work. $5k /months is your dream and nothing can stop you. Great! I like the persistence with which you dig yourself into the grave. Now, please sit down for a second and answer the following questions:
With three behind your belt, how many more houses will it take to get you to your goal?
How long will it take to obtain those properties if you continue down this path?
Let’s run some numbers:
It will take 9 houses to generate almost $40,000 /year of income after paying taxes.
Yellow line all the way down indicates the point at which your rental properties generate you $5,110 a month. This will happen 12 years later when you rent out 14 houses.
Just think about it, it will take you somewhere about 12 years of living like a monk, busting your ass day in – day out at the full-time job to finally get to the point where you can quit. How realistic is it to maintain such a lifestyle? Is it worth it? Are you ready to pursue this for 12 years? What are your thoughts?
Numbers above don’t include a lot of important things, such as:
Renovation/Maintenance Expenses. Houses break, the roof will leak, AC will break, the basement will get flooded. None of those unexpected experiences were included;
Evictions. Tenants don’t always pay rent and you will have to deal with courts, late payments, and evictions. Rooms stay unoccupied – rent doesn’t get paid;
Life Situations. People want new clothes, people want ice cream from time to time. People get married, get sick, and die. People make babies. People divorce. People lose jobs, people find better jobs. None of those were included in calculations. Not a single calculator in the world can predict and account for the life situations that WILL happen to you;
Property management fees. It will be hard to manage 14 houses without some sort of property management assistance. Especially if you are working at your full-time job. Especially if you want to make this income as passive as possible. As a baseline, expect to pay a typical residential property management firm between 8 – 12% of the monthly rental value of the property, plus expenses. Some companies may charge, say, $100 per month flat rate. 10% on your monthly rental income of $5,110 is $511. That’s an extra house for a second… Now you will need 15properties to keep you afloat;
House appreciation. Typically, over the years, your house will be worth more than you paid for it. This extra value can be refinanced and put towards the purchase of the next home. It can be a huge help and dramatically speed up the process at which you get to your goal. It is really hard to predict how much the property will cost over time and the further you shoot, the more off you will be;
Over the course of 12 years, you have saved and re-invested $840,000 worth of down payments (14 houses x $60,000) to buy 14 homes. Let’s see how well your investments paid off.
Cap rate is the crucial piece of information that investors use to make their decision. You need to know for two main reasons:
Analyze the performance, or expected performance, of your rental properties. For example, if there are three houses in your price range for sale, calculating the expected cap rates for all three can help you determine which is the best investment.
Determine your property’s fair market value (FMV). This is important if you’re selling a property. If you know how your property’s net operating income and the industry average cap rate, you can determine your property’s fair market value. Market value = net operating income / cap rate.
Cap Rate is the ratio of the property’s net income to its purchase price (or current market value). While the purchase price remains the same, the market value of the house raises year over year and gives more accurate calculations. $500 /month of cash flow results in a cap rate of 7.3%. What’s a good cap rate, you might ask? On the right are the averages according to CBRE’s North America cap rate survey for the first half of 2019. 7.3% is a good investment. Also since we included mortgage repayment into these calculations it can be considered a cash-on-cash return. Mortgage repayment is the variable that differentiates the two.
Inflation, The Rule of 72, and Home Appreciation
In light of recent, or I should say current events surrounding the COVID-19 pandemic we begin seeing the combination of inflation and low mortgage rates. What does it mean to real estate investors like us? High compounded rates of home appreciation. As a tenant or a typical consumer – you lose, because increasing rates of inflation are not very helpful for your consumer purchasing power of basic goods and services like food, utilities, gas or transportation prices. However, if you own the property, you should smile, because the best traditional hedge against inflation is, was, and probably always will be – the Real Estate. This is true because home values tend to increase at least as much as the reported annual rates of inflation. Let’s play around with numbers and calculate how soon your investments will double in value. We will use The Rule of 72. The use of it is very simple: you divide the number 72 by an estimate of annual appreciation gains. A home that appreciates at 10% per year (72 divided by 10 = 7.2 years) may double in value every 7.2 years. Another home that appreciates 7% each year can double in price every 10.2 years during a relatively strong economic time period. Or, as in our case, home appreciating in value at 3.5% per year is quite likely to double in value every 20.6 years. However the rule of 72 is not 100% precise, it gives a quick glance at the real estate market condition.
As the house owner, you should also be familiar with Compound Interest. It refers to the idea that when you earn interest on an investment, that earned interest is rolled back into the investment and starts to build on itself. Let’s look at an example on the left. We know that the average annual appreciation rate on your house in Ontario, Canada is 3.5%. Therefore we assume that your $300k house appreciates in value by 3.5% at the end of the first year of ownership. You just made $10,500 out of nowhere it’s put into your home’s value. The next year you’re earning 3.5% on the new property value of $310,500. At the end of the following year, you’ll actually earn $10,868, which is $368 more from the previous. Your earning has gone up, even though you haven’t done anything more than just leave the money in place. If you have enough patience and allow the power of compound interest to do its magic, the house you bought for $300k will double in value in about 21 years.
Inflation is the counterforce and works in the opposite direction. You probably remember as a kid, buying a can of Coke for $0.50? The increase in prices over time is inflation, and it basically means that a dollar today simply does not buy as much as it once did. According to Statista.com, in 2018, the average inflation rate in Canada was approximately 2.24 percent. So let’s use that as the example here. Things don’t look so bright anymore. After keeping your property for 25 years, it will increase in price only by $105,165. Inflation just ate $279,834 of your money…
To make things worse I’ll remind you that you haven’t paid your taxes yet. According to the Government of Canada: “When you sell your home, you may realize a capital gain. If the property was solely your principal residence for every year you owned it, you do not have to pay tax on the gain. If at any time during the period you owned the property, it was not your principal residence, or solely your principal residence, you might not be able to benefit from the principal residence exemption on all or part of the capital gain that you have to report.” This means that if you are considering selling your principal residence, you can be reassured that you likely won’t have to pay any tax on your home provided that you meet certain conditions. However, if you are considering selling one of your investment properties, the tax implication can be a bit more complicated. There are two streams of income you would need to pay tax on:
Capital gain. Say you purchase a property for $300,000, and you sell it for $405,165 in 25 years. Capital gain = $405,165 – $300,000 = $105,165. In Canada, 50% of capital gain is taxable, hence 50% of $100,000 is taxable = $52,582. If you own the property in your own personal name, this $52,582 is added on top of your other income and is subject to the marginal tax rate for the respective tax brackets you are in. For example, let’s use the tax rate we used in previous calculations – 26.8%. Hence tax liability is roughly $52,582 x 26.8% = $14,092
Recapture. You are allowed to claim the wear and tear on the property to defer your rental income. The wear and tear are called capital cost allowance. Assume that 90% of the value belongs to the building and 10% of the value belongs to the land, the capital cost of the building is therefore 90% x $300,000 = $270,000.
Where am I getting with all this?
It will take time. A loooong time to build the income that will support your lifestyle and allow you to retire. And if you start late enough, you might retire around the retirement age. The example used in this study is just one of the ways things might unfold. It is steady but very freaking slow to build your way out of the 8-5 system. Now I am going to ask you:
Does it worth spending 12 or even 10 years of your life living only on rice and beans?
Do you think, 12 years later, when you get that $5,000 check it will all seem worth the time and effort you put in?
Will you be able to hold on to your full-time job for at least another decade? Or find another boss, who will pay you at least the same salary.
I am pretty sure that those questions got you thinking. Here is a thing, if you want to break free from the hamster’s wheel, you have to get creative! There are ways to speed up your way to the goal of yours. Some, but not all of them are:
Reinvest Positive Cash Flow;
Keep the full-time job. If you quit your day job early you will lose your steady and secure income stream and lenders may refuse to lend to you because they believe you cannot support the repayments that the loan requires;
Tax Advantages of Real Estate Investing. Real estate is one of the most tax-advantaged investments compared to other investments.
Tax-free or tax-deferred retirement accounts
Team up with others.
Simply saving every dime won’t get you far… Saving is definitely better than spending, however, it will not make you rich. Don’t spend your cash on stupid stuff, but realize that it’s better to make more, rather than save more. Doesn’t matter how savvy you are, you can not save your way to wealth. In 99% of cases, your full-time job’s salary will be enough only to meet your basic needs. See below the Maslow’s hierarchy of needs:
You will live a pretty comfortable life:
Always fed, never hungry;
Live in a comfy warm little cave;
Healthy, with access to quality medical treatment;
Happy in your relationships with friends and family…
Indeed, that’s a great life to live. However, there are a lot of people I know who live such lives, but they don’t seem to be very happy. There are people who are different breeds. Those folks stagnate in the certainty and safety that the modern world brings. They strive for a challenge, they are hungry for achievement. Those people strive in crisis and hardships. When it comes to your life – you are the ultimate decision-maker.
You decide, either navigate for miles on woods roads or play it safe take a short trail.
You want to save money. One of the ways to do so is to cut the expenses. If you live in a city and you are in your twenties I am 90% certain that you rent. This is your major expense. In Toronto, where I am from, the cost to rent is RIDICULOUSLY high. One bedroom apartment prices start at $2,200 /month. One bedroom… Start…
Whatever your goals are, you are determined to save some cash. You are willing to tighten belt for some time, so later you can live better. Do you save for the downpayment for your mortgage? If so – great! I encourage you to do so, so when you buy your own house – you pay your own mortgage, not someone else’s.
I used to rent the house not too far from the city. Great place: three stories, including basement; big fenced backyard; garage in a quiet safe family neighbourhood. Everything was great, besides one thing – the price. Lived there for a year and quickly got sick from paying off someone else’s mortgage. I decided enough and did not extend the lease for another year. I was going to scale down by finding something smaller and cheaper so I can safe more money faster. I moved into my buddy’s basement apartment. The price I agreed to pay was half the price I payed for the entire house. Never lived in basement before, I had no second thoughts about possible issues that could arise. “Anyways, I am here only temporary” – I told myself and moved in. The plan was to spend the winter there and move out as soon as the snow melt down. Not a long time, what can go wrong? I ended up occupying the shithole from November till May, 2020. Basement life for 6 months though me a few things that I MUST reflect on if I don’t want to fall back into the same trap again.
Lesson #1: There is nothing more permanent than temporary.
Life happens and things that we plan almost never go according to the plan. COVID-19 happened and crushed almost all of my plans…
Lesson #2: Don’t sign the long-term lease unless you absolutely have to.
If you decide to scale down and sacrifice your comfort for some period of time in exchange of money, do not tie yourself down to the shithole. You need to be able to pick up and leave at any time. Things will get ugly, you will get sick of it. When you reach the breaking point, there is nothing worse than feeling locked without a chance to change anything. No long-term leases, save your freedom.
Lesson #3: You sacrifice your health.
You NEED the sunlight. You NEED the fresh air. You NEED warm place to live.
Those two are no-negotiable for your physical and mental well being. Few months into the cave, I’ve experienced what’s the basement life like and how it impacts my body.
Resting Heart Rate. My normal RHR is 39-42 bpm during sleep. Living in the basement it became a norm to see RHR of 45 and up. Your body does not rest. Your body does not recover. Interesting fact: every time I slept elsewhere, I instantly saw the drop in resting heart rate.
No Sunlight. There is no sunlight coming into the cave. It’s hard to tell in the morning if its day or night. I bought a few daylight lamps, which will turn on automatically each morning to awaken me. The last nail into the coffin was when the house owner put his backyard grill right against my tiny window, completely cutting any sunlight access. I didn’t tell him anything about that though, but probably should’ve as it bothered me. Living in a cave might work for a few weeks, not more. You NEED the sunlight, otherwise, vitamin D deficiency will start playing tricks on your mind and body. It did on me.
Fresh air. Where do you think the water heater is located in the house? Central heating unit? Breaker box? I can tell you from my own experience – right beside your head. What do those gas heating appliances feed on, except electricity and gas? The air. Where is the air intake located? Exactly! In the basement. Living in the basement you get oxygen-deprived. What are the health implications of such living in such conditions? Also, not to mention that those appliances are noisy. The heater doesn’t have a schedule that it runs on. Day and night you will hear the machinery working. It is loud! Keep that in mind when you sing the basement lease.
FREEZING cold. I spent the winter in the basement and I know exactly what it’s like. It was so cold that even my dog would sleep with his feel bent under him to stay warm. Sleeping in warm socks, pants and T-shirt became the norm. I would also put two blankets over to stay warm. Every morning was a struggle because you had to get out into the cold. My change of clothes had to be as fast as possible, otherwise, I would get the goosebumps from saying naked for more than 15 seconds. I don’t do well in cold, no-one does. Owner of the house was nice enough to get me the oil heater. It did absolutely no difference.
Basement Life is one of the major causes of Suicides and Depression.
*on my personal opinion =)
Lesson #4: Child’s cry will make you INSANE.
I love kids, don’t get me wrong however, I underestimated the power of a child’s cry. Little babies can’t talk, so anytime there is something wrong – they cry. I don’t know what’s a normal rate of them cry, but it seemed like the baby upstairs was crying no-stop. In the middle of the night, at 5 am, during the day. There is no schedule. Maybe they all cry so much or could be that parents are doing something wrong – not my business. Obviously, I have nothing against the child or parents, but if you try to put in few hours of concentrated work – it’s not going to happen. Earplugs don’t help. Noise-canceling headphones don’t help. Keep that in mind if you are looking to move into the place with small kids or babies.
Leeson #5: It’s not worth the savings.
I’ve been thinking about getting out of the shithole for a while. I was not happy there and even my friends noticed the change in me. Quietly, all this negativity and coldness creep up on you and suck you in. ENOUGH! 6 months were enough for me to say enough and run away as fast as I could. I am not a picky man and live a pretty minimalistic lifestyle, however I cracked only after 6 months… A lot of people live like that for years! I genuinely feel for them. How long will you last?
Only after it moved out I realized how deep that hole had sucked me in. Leaving the shithole in my U-Haul I could not stop smiling. I felt such a relief! I am freeee! Now I live in a house, with big bright windows, backyard and lots of fresh air. Only three days as I’m here and I can’t stop enjoying it. I love it! I feel the energy comes back. The first night I slept above the ground, instantly my resting heart rate dropped to normal 39 bpm. I want to create, I am inspired to live. I smile to others and receive the smiles back. Huh, it feels like an escape from the prison of some kind… I am also grateful for a chance to chose the place to live. I realize that for many reasons, a lot of people don’t have the opportunity to get up and go so easily. That really sucks! I am sorry for those folks. However if you do have the opportunity to live in place that you like – don’t chose to save by compromising your living conditions.
It will cost you much more in terms of mental and physical health.
Nevertheless it was an experience and I learned from it. I think I did… I am grateful for that period of my life because now I appreciate my new place a 100 times more. Now I know exactly where I don’t want to spend my life and what I need to remain happy and healthy.