132 | Downsizing Your Life And Financial Coaching With Lisa Duke

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132Monday-min
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Jonathan and Brad talk to Lisa Duke about her mindset shift and turning liabilities to assets.

Where Lisa Started

Lisa and her husband owned their own IT consulting business. The business was doing well, but it felt like something was missing. No matter how much they were able to spend, it did not really bring them lasting pleasure.

We were sort of on that “hedonic treadmill” where you buy something and it feels great. And then the excitement goes away and the bills associated with that thing remain. We were really trying to buy our way to happiness.

At the height of their spending, Lisa and her husband owned a large 4 bedroom house, a vacation home, an SUV, and a fancy truck with an air-conditioned steering wheel.

We had all of this stuff. We weren’t unhappy but we weren’t satisfied. It didn’t feel like we were making any progress in life. And we had been working, working, working at the business and then, of course, we had this huge slump in 2008 with the economy. And I just got to a point where I was like I just don’t know what the point of all of this is.

Big Changes

Eventually, her husband transitioned into being a direct employee for their business’ biggest client. Around that time, they made some major changes to their lifestyle.

They moved across Atlanta to the unfashionable, but the affordable side of town. Their home is still very nice, but only half the price of their old house. Then looking at the payments for the fancy truck, compared to the new home, they realized it had to go too. So they ditched the fancy truck and SUV.

Mindset Changes

Getting off the “hedonic treadmill” was not a switch that happened overnight. As the driver of this consumption change, she had to work to change her own mindset first.

The mindset shift really involved getting back to her own roots of small-town life. Her parents had a millionaire next-door mentality, but that had faded out of her lifestyle when she moved to Atlanta and started chasing a bigger lifestyle.

Before you know it, you are in a mindless consumption habit and you have to keep working to maintain it. The lifestyle she was chasing was just not working out how she had envisioned. After years of hard work, the couple did not have a lot to show for their efforts. The recession in 2008 was a wake-up call to the illusion that having more would bring happiness.

It looked like a fun game to play, but if I’m not going to win then what’s the point. Let me go back to what really matters to me, what’s really important; having a nice quiet life not trying to chase being flashy, not trying to chase having all the things and go back to what I know works.

She decided to stop chasing the flashy lifestyle and return to what she knew worked for her. Lisa chose to return to her roots in pursuit of a nice, quiet life. It was a conscious decision to change back to living a simple life and building towards the future and doing it quietly. It is not about what everyone else thinks.

After this huge downsizing movement, Lisa says her life is much simpler now and she enjoys that.

Second Home–Asset Or Liability?

Lisa and her husband decided to purchase a second home as an attempt to get her husband out of a slump. They landed on Weiss Lake, Alabama which is a short drive from Atlanta.

When they started downsizing their life, it seemed obvious that the vacation home would have to go. However, they wanted to find a way to keep it for their enjoyment without paying all of the bills. Short-term vacation rentals through Home Away Full Disclosure: We earn a commission if you click this link and make a purchase, at no additional cost to you. , which is similar to VRBO Full Disclosure: We earn a commission if you click this link and make a purchase, at no additional cost to you. , was the perfect solution for them.

Lisa thought that the marketing of this rental would be more difficult than it actually is. With the built-in marketplace already there, the logistics of finding vacationers is not that difficult.

[Renting out the vacation home] was a way to take something that we already had and turn it from a liability into an asset. I’m all about that. You know, anytime you have something spare, is there a way to monetize?

Action Steps To Start Renting Out Your Home

If you already have a vacation home and would like to start renting it out, there are a few things that you need to do first.

  • Remove Valuables: Take a look around and see if there is anything valuable or super sentimental at the house. Bring those items home with you.
  • Buy Extra Linens: It is nice to have an extra set to help with the turning over of a unit.
  • Stock Necessities: Make sure to have plenty of napkins and toilet paper on hand.
  • Clean Refrigerator: Remove any food items that shouldn’t be there. If you want to, you can leave condiments in the fridge for guests.
  • Take Great Pictures: It is crucial to have good photos of your house for the listing. Lisa had a friend use their drone to take aerial pictures of the property and the surrounding areas. Be sure to include pictures of the kitchen, bedrooms, bathrooms, and any features that make your home unique.

Those are the basic things that you need to do to get started. However, you can also consider renovations that will make your home more appealing to visitors. Remember that potential guests may care about the curb appeal of your property.

The Numbers

Lisa and her husband bought this lake house for $125,000 a few years ago. It is a 2/2, and they have done a few improvements. It is a home that has grown in value since they bought it. It was important to them to buy the home knowing that they could cover all of its expenses.

There is no guarantee just because you buy a property that people will show up. So we bought this house with the ability, if nobody showed up, we can cover the bills. Make sure that if no one shows up that you can cover the bills. Either out of cash flow or at least for a couple of months out of an emergency fund. The first thing that goes in a recession is anything discretionary, and vacation travel is definitely discretionary.

In a future recession, vacation travel is one of the first things to go because it is discretionary spending. It is crucial that you can cover the bills of your vacation home without any short-term rentals involved.

Although Lisa has never been able to write herself a check out of the vacation rental business, it might be possible for a different property. The goal for Lisa was to cover the bills of their vacation home and still enjoy it when they wanted to. The rental income covers the mortgage, all of the utilities, the cost of deep cleaning once a month, plus some of the repairs.

Basically, Lisa has been able to turn a liability into a net neutral. The couple still gets to enjoy their vacation home when they want to without paying for the house on a monthly basis.

Rental Listing

Lisa’s vacation home is booked for almost every weekend Memorial Day to Labor Day, minus the few weekends they reserve it for personal use. Most visitors stay for a long weekend, but some stay for a week. Lisa offers a nightly discount to visitors that stay the week.

On average, she rents the place out for $125/night in the spring and fall, off-peak. In the summer, peak season, she bumps that up to $150/night or $175/night on holiday weekends.

One feature of her rental is that it doesn’t have a TV. Although there is high-speed internet, the goal is for visitors to actually talk to each other. For some possible renters, it is a disqualifier; but for most–it is exactly what they are looking for. A place away from being “plugged in” and the constant noise.

Brad mentioned GetAway.House, tiny home rentals that offer cell phone lock boxes for visitors who want to disconnect. It could be a good option for those looking to unwind without cell phones for the weekend.

Financial Coaching

After this mindset shift, Lisa also underwent a career shift. She chose this path as a way to pass on what she has learned along the way. She is interested in helping people get to a place where they have money. When you have money, it seems there are endless options, but for some, they are just trying to figure out how to get money.

How To Find The Right Person For Money Help

Although many in our community have DIY tendencies, it really is okay to ask for help. If you have decided that you need help, sometimes the hard part can be finding the right person to help you.

Lisa recommends first deciding what time period you need help with. She mentioned that this idea originally came from Kelsa Dickey at Fiscal Fitness Phoenix.

CPA: If you are looking for someone to look at your past year and help with taxes, then you should talk to a CPA. A Certified Public Accountant can help you look in the rear-view mirror and understand what you have been doing financially.

Financial Planner or Advisor: A financial advisor is more focused on the long-term investment horizon. They can help you plan for long-term goals like retirement or college savings. A fee-only planner is more likely to help with those extra planning items.

Financial Coach: Finally, a financial coach is more focused on the here and now. They look at what behavior are you engaging in, often subconsciously, that might be sabotaging your efforts.

I like to be in the middle but more on the mindset side because I feel like that’s what messes people up. So in terms of DIY vs. getting help, if you’ve decided that you do need assistance, figure out which piece you need assistance with.

A financial coach could focus on the more tactical aspects of budgeting and spending or the mindset side of discovering your values and spending accordingly.

Practical Advice

Lisa tends to focus on the mindset side of the equation but also helps with the tactical details. The first thing to do is to start tracking your finances. Although you may have some idea about your spending habits, it is critical to track them.

Most people know their day to day expenses. They know how much [their] rent is, how much the mortgage is, roughly how much [their] utilities are, and they have a pretty good idea of what [their] spending on a day to day basis in terms of shopping and things like that…What tends to mess people up are the big annual expenses.

When Lisa started using YNAB Full Disclosure: We earn a commission if you click this link and make a purchase, at no additional cost to you. , she started with her past spending and adjusted from there. She finds it especially helpful with sinking funds like big annual insurance bills or vacations. YNAB is a great starting place for people that have never had a good handle on their finances.

Related: My Favorite Budgeting Software: You Need A Budget Review

Changing Your Mindset

Lisa has undergone major mindset changes in recent years and is coaching people that want to achieve similar results. One major piece of advice she has to offer is to harness the entrepreneurial mindset.

I think that everyone should have a side hustle, even if you don’t make any money at it. I feel like the mindset benefits are huge. Because when you own your own business, you start to think about ‘where does the money come from?’ and ‘where does the money go?’

When you own your own business, you are forced to think about where the money is coming and where it is going. As an employee, you can apply this to your day job to stand out to your employer. Any time you can increase money coming in or cut expenses, that really helps drive the business.

The best way to develop [the entrepreneurial mindset] is by doing. A lot of reading, a lot of hanging out with people that have done what you want to do; whether it’s in reality or virtually, podcasts and blogs. But really soaking in that mindset and then applying it to the rest of your life is so valuable.

Applying that entrepreneurial mindset, even as an employee, helps you become irreplaceable. That can give you leverage to set parameters and gives you power to focus on the parts of your job that light you up. Essentially, enjoying your job more.

Apply Your Values To Your Life

When you are trying to bridge the gap between mindset and the actionable steps of making a budget, start with your values. Determine what you really value. What are the most important things to you?

For example, if one has kids–they will say their kids are at the top of the list, and yet when you ask how saving for their college is going, they might realize saving for the kids is not as important as that impulse run to Target.

You need to put money towards the things that matter to you most, first. And then adapt your spending to that. So instead of saying ‘I will save for retirement when I have extra money’, ‘I will save for the kids’ college when I have extra money’  I’ll just tell you, if you’re a natural spender…there’s no such thing as extra money!…You can always out spend your ability to earn.

Don’t just say you’ll save for your goals when you have extra money. If you are a natural spender, then there is no such thing as extra money. Make an effort to set aside the amount of money that you think is necessary for the things you value and then live on what is left over.

Personal Finance Is Personal, But…

Don’t try to fund your goals out of the leftovers. That mindset shift might actually turn things upside down, and create openings for readjustments for smaller mortgages, no or less car payments, etc.

If  you get to the point where “hm, I’ve put money to all the things that really matter and now I can’t afford my mortgage payment”…maybe you do need to look at how much you are spending on the house…You really need to align your values with your spending. Then everything, I think, should be on the table.

Listen to Brad and Jonathan’s thoughts about this episode here.

How To Connect

Reach out to Lisa through her website, Lisaduke.net

To get straight to blog content head to Lisaduke.net/blog

Plus, Lisa has the goal of having 100 one-on-one money conversations between now and Fincon. So, if you are interested in a conversation with Lisa, then send her an email at [email protected] with ChooseFI in the subject line. Let her know that you want to chat and she’ll be happy to talk with you.

The Hot Seat

Favorite Blog: Bitches Get Riches

Favorite Article: Drank The Emergency Fund by Josh Overmyer

Favorite Life Hack: Downsizing. When we downsized the house to a smaller mortgage payment, it made the truck payment look like too much.

Biggest Financial Mistake: Joining a network marketing company, which I do not recommend.

The advice you would give your younger self: Start meditating.

Resource: For meditating, try Headspace or Calm

Bonus! What purchase have you made over the last 12 months that has brought the most value to your life? The Ring Doorbell

Related Articles

New to FI? Be sure to check out Episode 100: Welcome To The FI Community!

Downsizing Your Life And Financial Coaching With Lisa Duke

ChooseFI has partnered with CardRatings for our coverage of credit card products. ChooseFI and CardRatings may receive a commission from card issuers.
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4 thoughts on “132 | Downsizing Your Life And Financial Coaching With Lisa Duke”

  1. I love Lisa! Lord Truckington I, the mullet of trucks! Hearing about renting the vacation house was really helpful and so true about HGTV.

  2. Wow! Such a timely topic for us, as I have been wanting to find a financial coach to give us advice on how to best steer the beginning of our path to FI around our current finances, debt, and opportunities. Like :when to start house hacking vs. savings vs. debt pay-down; us being offered to buy a business a year from now; wanting to be able to make an impact on our family, friends, and community by getting to FI while we still have time to make an impact, as we are starting late in life, at 48 and 58. I am looking forward to our consult with Lisa soon! Thanks Brad and Jonathan for another great and useful podcast!!

  3. How can you downsizing the $650 truck? Because I am also bern looking and googling on how I can downgrade it. And it seems like there’s no such way to downgrade the vehicle. I still have $37k left in it and it’s value now is $29k

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