On the other hand, after you give away that first item that has some historical significance to your life, there is a twinge of anxiety followed by a much larger feeling of liberation. The dam of reluctance breaks and each succeeding separation becomes much easier.

Last summer when I went into Craigslist downsizing-mode, I also decided to sell two large objects that I have carried around with me for 45 years. I have been an Amateur Radio operator since the 8th grade. For $50 dollars (an advance from my parents), I acquired my “dream” radio receiver in 1965 (used, of course). In 1967, I acquired a radio transmitter that I had lusted after. I used these throughout high school. When I went to college, this equipment went into boxes. Since that time, I have fired them up only once.

I loved the memories of using that equipment. But they were outdated (remember vacuum tubes?), needed to be refurbished, and weighed almost 100 pounds between them. (What we Hams call “boat anchors.”) They simply needed to go. So I sold them to another Ham who wanted to restore them.

When I physically transferred possession of my old radio gear, there was some uneasiness. I asked the buyer to email me photos of the restored equipment so I could cherish those images instead of the actual “stuff.” This “fond photo-memory” strategy works better than keeping the stuff around. Five minutes after the stuff was gone, I was over it. The positive feelings of being liberated from stuff were now dominating my stuff-attachments.

Since that time, I have had no problem getting rid of anything that I have no use for. The irrational attachments to “things” are gone. Each trip to the dump or to Good Will brings more freedom – mental and physical. If it is something I want help remembering, I photograph it.

So my regular stuff-separation trips will continue. I am invading the attic now. There are many more downsizing adventures ahead of me. When it is time to sell this house, I will be ready.

Now if only Mrs. P. will join the de-cluttering club! That will be another chapter in our downsizing story.

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The interview was by telephone. It didn’t last long. Most of it was me discussing our personal downsizing experiment to a condo that is 1/3 the size of the house we raised our family in. Because there were not many questions asked, I doubted that I would be quoted in the article.

I was wrong.

The article – “When Downsizing Makes Dollars and Sense” – was published yesterday at CNBC.com. I was surprised to see that I was quoted extensively in the article. Even better, most of it was accurate. (The article states that we built our family home in 1980. Actually, we moved to Tennessee in 1980 but our present house wasn’t built until 1992.)

Unfortunately, the article did not link to this blog. That would have been nice because it would probably have added new readers.

The article is definitely worth your time, and not because I am quoted in it. It contains advice from others that should be considered. One piece of advice is a warning against keeping a vacation home in retirement. We are on a different path because right now we are juggling three homes, with plans to sell the “big house” in the next few years.

We still have lots of stuff to get rid of – that is a slow process but we are taking our time to reduce the shock value of downsizing.

Here is the link to the CNBC article:  Downsizing Makes Dollars and Sense.

Related posts:

1. Remodeling and Downsizing

Some states that hit working taxpayers hard are less aggressive with retirees. To understand this, you must consider all forms of taxes and and all sources of income. Location-specific taxation of retirees can include income taxes, property taxes (state and local), sales taxes, and use taxes. For some, inheritance taxes may also be relevant. Regarding income taxes, pension and Social Security income may be treated differently from investment and employment income. For example, our state of Tennessee has no conventional “income tax” but has a special “Hall Tax” that applies to certain sources and levels of investment income.

CCH is a major player in the tax publication industry and likes to create charts, calculate and rank tax burdens by state. Market Watch used the CCH data to create a slide show featuring the states most tax-friendly to retirees.

Number one is Alaska but given other cost of living issues, its remoteness, and weather, it would not be on my list.

Texas and Florida make the list also, which is a plus for them.

If course, these are generalized rankings. If the gap between your anticipated retirement income and desired spending budget is small, it would be important to do an individualized analysis based on your own sources of income, etc. and to look at related taxation trends. For example, Nevada has a low tax burden on retirees but that may have to change somewhat for Nevada to get its finances in order

Here is the link to the slide show and article.

Related posts:

1. More Opinions on the Worst States to Retire
2. Ranking the 50 States for Retirement 2011
3. Taxes and Social Security: Random Thoughts and Concepts

Two weeks ago we launched what will be likely be the most expensive and comprehensive remodeling project – our master bathroom. I am painfully aware that our actual return on this “prepare to downsize” cost will be less than 100%. However, our master bath was so dated that it was likely to cause potential buyers to turn around and walk out of the house without further consideration. Moreover, our shower was constantly leaking into the lower level and I was tired of trying to stop those leaks. It was time to gut the bathroom and start over.

We brought in a remodeling expert with design expertise and a Realtor on staff. We told his team that we wanted a complete bathroom makeover but with two stipulations: (1) the design and decor had to appeal to a large percentage of potential buyers when we sell in a year or two; and (2) the level of finishes should be consistent with homes in our price range but without over-the-top luxury.

Clearly, our Jacuzzi tub had to go. In its place will be a smaller soaker tub and an expanded shower. The corner linen closet is also gone because it occupied too much space. In its place will be a floor to ceiling linen cabinet built-in along the wall with the double vanity sinks. The carpeting is being replaced by travertine tile. The cultured marble vanity tops will now be granite.

To select the contractor, we interviewed three and obtained two fixed-price proposals. The third proposal was for a cost-plus job. That is the proposal we selected, for several reasons. First, this remodeling contractor has been around 30 years with a significant positive track record. Second, he had a larger staff available to help us make appropriate selections of materials. Third, his internal cost estimates (one by the owner, one by his designer) were in-between the two fixed-price proposals we received. This will end up being a $25k-$30k project.

The work is progressing rapidly. I was shocked at how quickly Mrs. P and I were able to select the new fixtures, tile, and cabinets, with the expert assistance of the contractor and his suppliers.

Sadly, the beautiful custom solid cherry cabinets and tub skirting are gone. However, we will try to reuse the vanity cabinets at our lake house.

Although this is expensive, we will end up with a master bath that will not scare-off buyers. At least we will get to enjoy the new bathroom for a year or two ourselves before selling.

After the dust settles (and our bank account recovers!) from this bathroom remodel-to-downsize project, the next project will probably be the kitchen. We will not do a complete kitchen make-over. Instead, we will refinish the existing cabinets and replace the solid-surface counter-tops with granite. We may need to update the appliances.

Are any of you preparing your home to sell so that you can downsize?

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The Top Retirements blog just released its latest list of the worst states to retire. I was not surprised that the list was dominated by states in the Northeast and Midwest. Retirees in those states are often burdened by lousy winter weather and high taxes.

To create the list, the editors used 5 factors:  Fiscal health, property taxes, income taxes, cost of living, and climate. An interesting feature, however, is that you can reorder the list yourself by eliminating criteria that are not important to you.

My personal belief is that each of the 5 criteria used are important to a happy retirement.

Two states had a numerical tie as the worst states in which to retire:  Connecticut and Illinois.

Although I think Chicago is quite livable for a large city, Illinois in general has terrible economic problems which it is trying to solve by increasing income taxes.  For example, work and investment earnings are taxed at a 5% flat rate.

Property taxes are killers in most of these states. It is miserable to think that you could pay off the mortgage on the home where you are living in retirement but still face a monthly property tax payment of $500-$1000. For example, in New Jersey just the median property tax bill is over $6500. Ouch.

Minnesota (#7 on the list) punishes retirees with bad winter weather and with no income tax exemptions for Social Security or pension income.

We are sticking with Tennessee and Kentucky, thank you!

Read the list for yourself here: Worst States to Retire 2012: Northeast and Midwest Come Up Losers.

Related posts:

1. Ranking the 50 States for Retirement 2011
2. Which States are the Most Tax Friendly for Retirees
3. Retirement Locations, Weather and Environmental Hazards

This list is somewhat unique because it asked the readers to rank the different retirement living factors according to their importance. According to reader preferences, in this list economics determined 47 percent of a state’s final score, its climate determined 33 percent, life expectancy determined 12 percent,  and crime was weighted at 8 percent. With economics and climate so important, you can predict that the southern states would do well.

I was somewhat surprised to see that both Kentucky and Tennessee (states where we spend our time) were ranked in the top 10. Climate and economic factors carried the day for these states.

The lowest ranked state for retirement was Maine, right below Michigan, Massachusetts and Connecticut. I wouldn’t have predicted that Maine would be the worst but the other lowest ranked states didn’t shock me at all.

What is really interesting is how radically the rankings changed from 2010. This is because the readers – not the editors – determined which retirement living factors were most important to them. If you let the editors decide what is important, they can create some crazy rankings about retirement locations. One example is this story, where Milwaukee, Wisconsin and Newark, New Jersey made a top ten retirement city list. Seriously – Newark?

Here is the link to the complete list. Best States for Retirement 2011: All 50 States.

If you want more detail about the top ten retirement states, read this article also.

So how does your state rank for retirement? Do you agree?

Related posts:

1. More Opinions on the Worst States to Retire
2. Which States are the Most Tax Friendly for Retirees
3. Retirement Locations, Weather and Environmental Hazards

Weather is certainly influential with a lot of retirees. That’s why Florida and Arizona are jam-packed with retirement communities filled with baby boomers who are fed up with cold and snow.

I would hesitate to live in some parts of California because of earthquake threats, even if the taxes were tolerable.  California has also experienced many mudslides and forest fire events in recent years which have affected residential areas.

I also want nothing to do with communities along the Gulf and Atlantic coasts that are regular hurricane targets.

Here in middle Tennessee we are relatively fortunate. We have a mostly mild climate and no hurricanes. The New Madrid Seismic zone runs through West Tennessee so a Memphis earthquake disaster is not out of the question. We did experience a 200 year flood along the Cumberland River in 2010 but not precisely where I work or live. Tornadoes are probably the most common weather hazard but they are ubiquitous throughout the heartland.

I suppose the bottom line for me is that I would never want to live in California or own property in a hurricane zone or along a flood-prone river. Beyond that, where to retire is more about the benefits of the location than it is about the environmental risks.

Will you consider weather and other environmental hazards and events in your decision about where to retire? Which are the most important to you?

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1. Don’t be in a hurry.  Some vehicles are always popular and are certain to find buyers if the price is close to reasonable. Other vehicles require more of a “niche” buyer. Our vehicle was more in the “niche” category. It was an older (1999) premier brand (Lexus) that combined high performance (not a gas saver) with luxury features. I knew it would take time to find the right buyer who valued vehicles like this, even in our MSA with a population of 1 million plus. In a smaller market, eBay would probably be a better selling channel compared to Craigslist. I was almost ready to put the car on eBay myself.

2. Put photos and lots of detail in your ad.  I learned from my earlier sales that I did not enjoy answering endless questions from buyers/lookers about the item for sale. With this vehicle, I cleaned the car inside and out, polished it up, and took 4 high quality photos (the maximum allowed on craigslist). I then crammed the text of my ad with the history of the car, where it was garaged, how it was maintained, its physical condition , every feature it had, and why I was selling it. This greatly reduced the amount of time I had to spend answering questions. Instead, most of my inquiries were “do you still have it” and “when can I see it?”

2. Test your pricing.  I first put the car on Craigslist a month ago. I priced it at the high end of retail book value ($9,100). I had almost no activity in response except for the shopping trolls (more on that later). Ten days later I dropped the price to what I believed would be another resistance point, $8500.  I had one looker who offered me $5000. I politely rejected that with no counter-offer. Two days ago, I moved the asking price to $7950 and again renewed the ad (which pushes it to the top of the list). This generated a lot of activity.

3.  Ignore/blow-off the shopping trolls and email negotiators.  Apparently there are folks out there who think they can solicit better prices by making low-ball offers or asking “what’s the lowest you will take for the car” without even seeing the car. Apparently, there are also sellers who lack the confidence to blow these people off. I had one guy email me yesterday with $4500 offer – cash! – if I didn’t sell it before my deadline. First, what did he think I would take from other buyers other than cash? Second, I had no deadline. I emailed him this short response: “Not gonna happen.”  To other trolls I just said: “I only negotiate in person.”  Another prospect wanted me to drive the car to his brother’s shop to look at. I of course declined. Apart from the safety concerns, I would not want to negotiate on the buyer’s home turf.

4. Don’t negotiate against yourself.  I had a prospective buyer drive the car on Sunday. He was there with his two brothers. Each took a turn asking me “what’s the lowest price you will accept.” I kept answering “I haven’t decided that but if you make me an offer, I’ll let you know if it’s high enough.” Finally, the guy offered my $65oo. I said no, but after thinking for a minute, I countered at $7400. He then told me that his offer was firm. I said that’s too bad because he was turning down a good price on a good car. I told him I had two other buyers wanting to see the car. They left.

5. Establish trust with your buyers. With each buyer, I was quick to disclose the one item that I knew was wrong with the car (missing pixels on the audio display). I never said there was nothing else wrong, only that I didn’t know of anything else. (A true statement.)

6. Go along on the test drive.  Even if you trust a prospect not to steal your car, the test drive gives you more opportunity to highlight the selling points of the car. Our car had a lot of small luxury features that were not readily apparent in a short test drive. I made sure the buyer knew about them.

7. Have your documentation ready. When you get an eager buyer, make sure you can close the deal quickly by having a clean title in the proper name, etc. Last evening, a single baby boomer woman drove the car for 5 minutes and offered full asking price on the spot. She was tired of the minivan/SUV experience and was ready for something radically different but affordable. Our car filled that need perfectly. She offered me a personal check right then or a cashier’s check today. I wanted the certainty of a bank check so I agreed to meet her at her bank first thing this  morning. I wanted to meet at the bank so I could confirm that the check was genuine.

8. Use a Bill of Sale. Although a signed title is adequate to convey ownership in most states, I recommend that you also provide a Bill of Sale, to be signed by both seller and buyer. The Bill of Sale should contain clear language stating that the car is being sold “as-is” with no express or implied warranties as to the condition of the vehicle. This protects you against legal claims if the transmission falls out of the car the day after you sell it. A frustrated buyer may claim that you stated the car was in “perfect condition.” A judge might believe the buyer and rule that you made a verbal warranty to the buyer. Not good.

Car selling and selling in general on craigslist can really help with your downsizing. I know it has helped us.

Do any of you have other tips to share?

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So far, I am quite please with the results. In less than a week, we sold a treadmill, a large desk, a large bookcase, an old audio cabinet, and a bicycle. In each case, the first looker became the buyer. I priced the items aggressively for quick sale because I didn’t want to waste time on emails, phone calls, and showings to people who enjoy negotiating. I enjoy negotiating sometimes, but not when we are merely eliminating stuff that has no value to us because it is just taking up space.

Before posting our Craigslist ads, I studied other ads for similar products. There were two characteristics of many of those other ads that I believed were counter-productive to a good selling strategy. First, the photos of the item for sale were either non-existent or of very poor quality. I took high quality photos and in most cases, posted four photos (different views) of each item. (Four is the Craigslist limit.)

The other problem with most Craigslist ads is that the descriptions of most items bordered on the worthless. There was not enough  information about the features and condition of the items. There is no excuse for this because the Craigslist ads are free and allow you to post lots of info about your items for sale.

Providing a lot of detail in your Craigslist ads will, in my opinion, minimize the frequency and duration of communications that you will have with prospective buyers. You want buyers to know as much about the item as possible from your ads so that they don’t have to ask you. Downsizing is something you do to make your life easier. Therefore, you should design your downsizing strategies (and your Craigslist ads) for that purpose.

There a few things I’ve posted on Craigslist that have not attracted much attention. Those will become donated items. One reasonable attempt at selling is all I intend to make, then the stuff will be eliminated by any means possible. Seeing the newly opened spaces in our home and garage is a reward unto itself.

We have other stuff (mostly collectibles belonging to my wife) that will need to go on eBay. More about that later.

Have any of you  boomers used Craigslist as part of your downsizing strategy?

Related posts:

1. Craigslist Car Selling Tips
2. Remodeling and Downsizing

I’m not certain I agree with the assessment that the eight vacation homes highlighted by CNN are bargains.

Let’s first start with these three financial principles that I espouse for those who are on a retirement glide path and considering purchasing a vacation home:

1. Do not buy a vacation (or other second home) just because it appears to be a “bargain.” (More about this later.)

2. Do not buy a second home just for vacations. If you will use it a lot when you are retired, that’s a different story.

3. Do not buy a second home if you must rent it to make it affordable. That’s just too much risk to take on when you are close to retirement.

I speak from experience. We bought our second home ( a lakefront property) eight years ago. When we purchased it, we envisioned using it for vacations and weekend getaways now and as at least a part-time residence when we retire. That is still our plan.  Therefore, several years ago we paid off the mortgage on our second home. We have never rented it. So far, so good with our plan.

So what about the “8 great vacation homes” featured by CNN/Money? Three (in Massachusetts, New Jersey, and Texas are well over $1 million asking price, so those don’t even count as second homes in my book. They are extravagances for the very wealthy.

Five are on the ocean which is nice except I think lake living is better for a retiree.

While that cottage in Myrtle Beack looks like a deal at under $150k, note that the house sits on a land lease at $8200/year. That’ s no bargain at all.

The listing that is closest to my heart is the chalet-style home on a small lake in Kentucky. I’m partial to that style because our second home is on a very large lake in Kentucky (Lake Barkley). There are some serious deals to be had right now on Kentucky lake front property. Kentucky is also friendly to retirees plus the weather is moderate.

Even if you are not in a position to buy a second home bargain right now, it can’t hurt to look!

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