It’s finally happened! We’ve struck real estate gold and we’re moving to a big Victorian apartment downtown! But we’re trading our debt free status for what I’m calling mindful debt.
Our Descent into Mindful Debt
For anyone who is tuning in late… last autumn, Robert and I attempted to buy a Georgian townhouse in England. After recovering from that disaster, we starting looking for a place in Denmark. I was adamant that we should stay in the city centre, but Robert had a bizarre (but thankfully temporary) yearning to move to the suburbs. So we looked at house after house after house, plus a whole bunch that I never wrote about. He indulged me and we came close on this seven room apartment, but it had “money pit” written all over it, so we passed. Well, that and he was still sort of dreaming of life in the suburbs. Granted they were cool 1960s Danish architect-built suburbs, but still!
Then we decided to make the most of our situation and embrace small space living. But despite our best efforts, that totally sucked, so we kept looking and wishing.
We’d wanted a seven room apartment, but those are rare as rocking horse shi*t. The few that exist used to overlook the harbor, which has recently been turned into commercial space. Now they can’t even give those apartments away. So, we pragmatically lowered our ambitions to five room properties with the right layout.
In Denmark, the number of rooms includes everything except the kitchen and bathroom, so I’m not talking about a five bedroom place. Keeping in mind that I work from home, that most apartments don’t have eat-in kitchens, and that most rooms aren’t big enough to be a living room/dining room, you can see how five rooms actually isn’t all that ostentatious.
We’ve looked at lots of apartments, but most of them were too small and had been robbed of their original period features by well-meaning renovators. That was a deal-breaker.
A Big, Old, Victorian Apartment Smack Dab in the City Centre
Then, BAM! One boring Tuesday, a five room apartment right smack dab in the middle of downtown came on the market. Like downtown, downtown. Like we’re going to have to sell the car. Like we could walk out the front door and be sitting down at our favorite cafe within about 2 minutes! True story.
It was built in 1899 and it needs a lot of work, but its period features are intact, it has 10.5′ ceilings, and it’s tucked away on a quiet street. It was priced in a way that we can afford to keep two places while the renovations are happening. And the sellers were very accommodating.
Meet my new muse…
In person, it totally looks like a disaster. The floors are cheap veneer, there’s peeling paint everywhere, and its in pretty poor repair. But we’ve found a small army of people who can help us restore it. We’ve even found a restoration specialist who can strip 117 years of paint off the crown moulding and woodwork, and replicate any damaged bits.
We’ll get the keys on November 15, start renovations on the 16th, and (hopefully) move in by February 1. Depending on when you ask me, I’m either ecstatic about or terrified of this project.
So, what is mindful debt?
Mindful debt is calculated debt. It’s debt that doesn’t threaten your long term financial health. It’s debt that doesn’t negatively affect your current lifestyle. It’s not new car or credit card debt, and it’s not living above your means debt. It’s low-risk debt with a clear path to repayment in the short or medium term. It’s a hand up that won’t keep you awake at night.
I’ve already paid off a mortgage on my own, and Robert and I have been mortgage free together for a year and a bit. We’re taking a small mortgage in order to finance the work that has to be done to make this place beautiful again. The interest rate on a ten year loan (they don’t do five year loans) is 0.5%. Even after we’ve paid for the restoration, the apartment is projected to be worth quite a bit more than we’ve paid for it. Right place, right time, it didn’t last a week on the market. That’s mindful debt.
I’ve invested nothing to start my business. I’m running it out of my living room on a seven year old Macbook Pro and its thriving. I’m turning jobs away. Sure, moving to a bigger place will improve our living situation, but my business is out of the proof of concept phase and I need to invest in it. I could rent an office, but instead, this small loan is an investment in a dedicated home office with its own entrance (and a tax deduction).
I’m working more than full-time at the moment, and wondering how I’m going to find time to make the hundreds (thousands?) of micro-decisions that go into a restoration project of this scale. Fortunately, Robert’s schedule this semester is such that he can handle a lot of the coordination. And I’m getting a head start on paying off that mortgage.
And so it begins…
Amy says
Sage – I’m so happy for you! It has so much great potential. (The pictures you posted don’t show the peeling paint or the lousy floors. It looks wonderful. I agree that the remodel will be stressful with 1001 decisions that must be made NOW. Glad to hear you will have help on that.
Sage says
Thanks, Amy! We were surprised at its poor condition when we saw it in person, but it was priced to reflect that. I’m just trying to take it room by room. I know it’s going to look wonderful when its finished, I can already see it in my mind!
Krystal says
An eat in kitchen would be so fun to have! Those photos look pretty nice, and I can’t wait to see all the progress you make. I would love the option to sell our car and walk everywhere. So much easier and a money saver due to gas and insurance. Good luck!
Sage says
An eat-in kitchen is a practical luxury with space being at such a premium. It’s a relief to not have to find space for a dining table… in our current three room place, it’s actually in the hallway!
I’ve been living pretty much car free for the past two years and a bit, so I don’t think I’ll miss my car too much. But selling it is bittersweet for me. I lived without a car for two difficult years when I first moved to Denmark, and I went to hell and back to get a Danish drivers license, not to mention paying 180% in registration tax when I actually bought the car. But the only time we really use it now is to go to the airport, so it’s money that can go toward paying off the mortgage.
Krystal says
You’re right about the cost of driving! It can certainly eat up a big chunk of our budget. I only know what American driving costs are, and luckily, they aren’t SO bad… however, our insurance rates can skyrocket just from moving from one city to the next!
Bites for Foodies says
I love this apartment as is! It has that quintessential modern look that is reminiscent of European flats. Whereabouts in Denmark?
Sage says
You wouldn’t say that if you saw it in person :)
I’m more a fan of the classically-styled flats you find in the European capital cities and I’m hoping we can bring it back to that. I don’t get a modern vibe from it at all. Looking past the outdated kitchen and bathroom, the ceiling height, windows, woodwork, and pipework are all in keeping with late 19th century/early 20th century architecture. I was disappointed that it didn’t have a fireplace, but radiators were the height of fashion and an indication of wealth at the time, so I’m out of luck!
It’s in Aarhus, Denmark’s second largest city, and the 2017 European Capital of Culture.
tammileetips says
Congrats on the new place!!! I am sure you will love the end results, I love the idea of having a tub sent over from England!! I can’t wait to see how you end up finishing the place up and make it your home.
Sage says
Thanks :) The tub wasn’t negotiable… one of our criteria was that whichever place we chose had to have enough room for a tub. I even threatened to put it in the kitchen like they used to in old NYC apartments! Fortunately, it hasn’t come to that ;-)
Shirley Eliza Martinez says
Congrats! The place looks gorgeous and we definitely don’t notice any flaws. I wish I had a place like this, I would do so much!
Sage says
Thanks, Shirley. The real estate photographer was very good at his job, it’s a whole different story in person. I just hope I can bring it to its full potential.
Kim says
Wow the apartment looks gorgeous! We are actually going through a similar dilemma ourselves. We live outside the city and enjoy a nice property and would have our house paid off pretty soon. If we want to move to the city though, we’ll be taking on a lot of new debt. I like the new way of looking at it though. Congrats on the new place!
Sage says
Thanks, Kim. It really is a balance… do you limit yourself because of fear of debt, or do you borrow responsibly and get what you really want? It was a big decision to go from owing nothing to anyone to having debt, but we weren’t happy with our living situation and so being debt free was overrated in our particular situation. But yeah, we would’ve gotten a lot more space for our money outside city limits.
fantasticmrsmom says
Your new place is amazing. With just a few strategic upgrades it would be an absolute dream home. More people need to think about mindful debt. I am trying to teach my children to think long and hard before spending their hard earned money, especially when it comes to items such as cars and homes.
Sage says
Thanks :) I really do hope it will be our dream home when we’re finished with it.
It’s so important to teach kids good money management skills. I was raised by my grandparents and I credit my grandfather for teaching me good financial sense. I’ve never paid a cent in credit card interest and its because he taught me to work hard, live within my means, and to save up for the things that I really want. His advice has served me well.
Kristy says
I think your new apartment is gorgeous! So much charm and style! There is definitely a difference in mindful debt (like yours) and useless debt. Investing in a home and your business is definitely a good move. Sounds like your business is on the right track!
Cassie @ Southeast by Midwest says
I am impressed how well you and your husband has thought out the entire situation! I don’t think I have ever so meticulously planned anything in my entire life. I’m sure the renovation and move will work out great for you; it looks like you have the perfect place picked out.
Sage says
Thanks, Cassie. It comes with the territory being married to a PhD, he’s very analytical :)