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The Ultimate Guide: How To Leave Your Hometown
Starting into the abyss.

Jennie here.

Before I turned 24, I’d spent the majority of my life in Albuquerque, New Mexico. After studying abroad twice in Japan - I thought to myself: There’s so much I haven’t experienced yet. There has to be something more than just spending the rest of my life in the place where I grew up.

So, I packed my bags and left.

I never looked back.


5 Reasons

Why You Should Leave Your Hometown


Have you moved in the past year? In 2016, only 20% of millennials had moved the previous year. 

Expanding your universe and meeting new people or experiencing new things should be enough to convince you to leave but if it isn’t…

Here are a few benefits you should consider when you’re debating whether or not you should move out of your hometown:

Reason 1: You’ll make more money.

A study released in 2015 showed that people who left the community they grew up in tend to be better educated and earned higher incomes. So, leave and make more money. You can always choose to come back. Check out the stats below.

Reason 2: Discomfort with the unfamiliar equals progress.

As human beings, we learn the most about ourselves when we’re faced with adversity or new challenges. In order to face adversity, oftentimes that means that you'll have to start all over in your life again in various aspects (e.g. you have to re-learn how to navigate a new city, get a new job, go to a new school, find new friends, and learn to be alone, etc). Discomfort shouldn't be something that you should shy away from but something you should face head-on.

Reason 3: You have time to find yourself without all the extra bullshit.

This was a big one for me. When I left home, I felt instantly liberated. I went to a city where no one knew my name. I wanted to carve my own path without pressure from my parents or my peers and to experience different things.

Reason 4: You love your family more once there’s distance between you.

I think at some point in your life, everyone needs distance from their families. It’s the only way to become 100% independent. And fortunately for me, it’s been great to be away because I’ve grown to love my family more without the emotional hang-ups that made me resent them.

Reason 5: You learn to appreciate your hometown more after you leave.

After I left, I started missing all the small things I experienced growing up in Albuquerque. For example, I missed stargazing in the mountains or the summer thunderstorms during “monsoon” seasons. These were small things or moments that made my upbringing really pleasant.


How To Leave Your Hometown

In 5 Steps


Small Town Shoes.png

I never said leaving home was easy. I had to deal with a lot of guilt when I left my family.

Step 1. Understand why you want to leave.

Before you set on some big goal of leaving your small town, you should understand why you want to do it. What do you expect to happen when you leave? Why can’t you accomplish the same thing in your hometown? And if you have clear and honest reasons, you’ll thank yourself for it when it’s time to leave or when things get tough.
 

Step 2. Choose an end (or begin) date.  

After I graduated, I gave myself exactly six months to GTFO. Why? Because I knew if I stayed longer, I would've been offered another job or opportunity that could’ve tied me down to the city for another few years. Setting a realistic date and sticking to it also helped me get excited about a new chapter in my life.
 

Step 3. Pick a place, any place -

but weigh the pros and cons before you settle.

There are a lot of people out there who will tell you to follow your heart and move to your dream city like San Francisco or New York. My stance on this philosophy: that’s a terrible idea - especially if you can’t afford it.

Instead, you should draft up a list of personal criteria you want out of a city. Believe it or not, there are several cities outside of New York that have cool communities and opportunities. Don’t believe the hype.

Here was my list of criteria:

  1. Good to great public transit system. I wasn’t going to move with my car so I needed a city that I could get around easily without a car. Not having a car saved me thousands of dollars a year in insurance, maintenance, and gas fees.
     

  2. The rent had to be affordable. I was coming from a town where you could get rent for as cheap as $500 a month. I knew I couldn’t afford much but I needed some level of affordability. That meant places like San Francisco and New York City were out of the question.
     

  3. The city had to have a few decent schools nearby. I thought I might go back to graduate school at in my mid-20s so I wanted to be in a city/state where I could establish residency.

I didn’t get everything on my list but I got pretty damn close when I moved to Boston. The one thing I didn’t account for was weather - I didn’t realize how much I hated snowstorms on the east coast. Not a huge deal breaker but it was a painful transition.
 

Step 4. Save 2-3 times more than you had initially planned for.

Renting an apartment in places like Los Angeles or Boston will cost a lot more than you think. For example, when we moved to Los Angeles - we had to pay one and a half months rent for the security deposit AND the first months rent - that meant we dropped $3,500 within the first few week of moving.

Cautionary tale: I did not save enough money to help me make the transition to Boston. I had to borrow money from Ivan to keep myself afloat for the first six months. I had to really hustle in that first year taking on multiple temp and retail jobs.
 

Step 5. Book a ticket and leave. Seriously, GTFO while you can.

If you have a tough time committing, start telling friends and family when you’re going to leave - nothing is quite as potent as social pressure and expectations. In addition to that, there is no better way to commit to a choice than by booking your plane ticket.

Good luck.

***

Other helpful resources:



The Hidden Cost of Home Buying

The public wants to be led, to be instructed, to be told what to do. They want reassurance. They will always move en masse, a mob, a herd, a group, because people want the safety of human company.
— Jesse Livermore

Homes & Opportunity Cost - The Origami Life

Ivan here. 

I hate to start the week with math, but that’s exactly what’s about to happen. 

A few months ago, I wrote a post titled “Why a House Is Not a Home,” and in it I questioned the conventional opinion that real estate is always a good investment. The point I made is that real estate, like any other asset, is not always "safe" and comes with opportunity costs that most people ignore. 

To drive this point home, I’m going to provide a real life example from a recent trip Jennie and I took to Denver. 


Housing Prices in Denver, Colorado


A member of Jennie’s extended family owns a house in Denver, which was purchased in the mid 1980s for $87,000, and is now worth $400,000 in 2017, supported by the hot real estate market in Colorado (and historically low interest rates). 

That’s a 460% return. 

Here’s the thing: on an annualized basis, assuming a thirty year horizon (it was longer but let’s use thirty for simplicity), the rate of return was 5.2% per year. 

Inflation over that period was 3.5%. 

5.2% minus 3.5% nets you a real return of 1.7% per year. This is assuming the original home was purchased in cash - that it wasn’t financed with a 30 year mortgage paying interest. If that’s the case, the real return would be less than 1% - maybe even negative. But I’m an optimist, so let’s go with 1%. To lock in this 1% return, you’d need to eventually sell this house and incur costs on top of that. 

At this point, I haven't factored in any of the pros and cons of owning real estate. Like a stable roof over your head to raise a family and the advantage of using leverage to boost your net worth. I also haven’t factored in the maintenance and remodeling required on a house over thirty years. As home values rise, generating wealth on paper, the additional property taxes you pay on the value of your home is a real cash outflow. 

I don’t care about any of the above. That’s largely a personal decision to be made based on personal values. 

What I care about is opportunity cost. 


The Opportunity Cost of Owning a Home


Homes & Opportunity Cost - The Origami Life

$87,000 invested in a low cost index fund by January 1, 1987, and held through ‘Black Monday’ ten months later, the dot-com bubble and the Great Recession would be worth $1,000,000 in 2017. Even if only half of it was available in 1987, it would still net you $500,000, enough to buy a decent sized retirement home in thirty years (no downsizing necessary) - even in a period of historically low borrowing costs and historically high home prices. 

Which means historically speaking, the opportunity cost of taking out a 30 year mortgage in your 20s is anywhere between half a million to a million dollars. 

Does this mean we should bet the farm on index funds in 2017? Alas, it’s not that simple.  

However, the prescription of a slow and consistent accumulation of low cost index funds over a long period of time, through the ups and downs of the market, will almost certainly outperform real estate on an inflation-adjusted basis.

It all depends on whether we have the emotional fortitude to be, as Warren Buffett says, fearful when others are greedy and greedy when others are fearful.” 

In practice, this means having the courage to stay the course when everyone else is calling for the end of the world. 
 


Our Takeaway


When it comes to home-buying, I’m not saying that one size fits all. I’m simply pointing out the hidden costs (and risks) of a long term mortgage.

This is just my personal opinion, but I think Americans have developed a disturbing comfort level with debt, debt that’s largely been subsidized by the federal government. This is great when interest rates are falling, but disastrous when the cycle turns or when half the jobs that exist today start to disappear

Which is to say that by taking out a mortgage in your twenties, you’re making an implicit bet on stability over growth. 

I guess it all depends on when we should value stability: 

a. when we’re young, ambitious and mobile, or
b. when we’re older and ready to settle down.

If reading this has made you a little more unsure about the buy vs. rent decision, then good. Only idiots are certain all the time. In fact, it’s their natural disposition. And while the ignorant have always occupied a fixed percentage of our population, they seem to have grown awfully confident these days.
 
And that's exactly when everyone else needs to get cautious. 



Why A House Is Not A Home
 
5 Reasons Why A House Is Not A Home - The Origami Life
I don’t want to own anything until I find a place where me and things go together.
— Truman Capote, Breakfast At Tiffany's

Ivan here. 

Conventional opinion can oftentimes be very stupid - a natural consequence of decades (sometimes centuries) of people never questioning their own assumptions. Let’s take this statement for example:


Real estate is a safe investment.


Sounds accurate, right?

Now here are some cold, hard facts: 

  • The average return for US real estate was 3-6% per year from 1968 to 2009. 
  • Inflation averaged 4.5% during that same time period
  • This was achieved amidst a historic (and virtually continuous) fall in interest rates, from 20% in 1982 to 0.75% today.

This begs the question: what happens to the value of assets when mortgage rates have nowhere to go but up?

Of course for most millennials, all of this is academic, as very few can afford a home in the first place. Even for those who are lucky enough to be able to, the price tag is usually far higher than they expect:

But I think even the affordability problem is missing the point. The question that millennials should be asking themselves is: should you buy a home even if you could afford one? 

Here are my five arguments against. 


5 Reasons Why a House is Not a Home


1. You’re Not Building Equity in Anything

Your first home is almost never an investment - whether its value goes up or down is completely irrelevant. As a Canadian who’s witnessed the Toronto and Vancouver housing bubble firsthand, it’s always baffling to me why people care how much their home is worth in any given year - when they clearly have no intention of moving out of their neighborhood. 

I may be in the minority, but I think “building equity” is just a euphemism people use to make themselves feel better about living with debt, all while fantasizing about the day when they’ll finally get their life back. 

2. A House Costs More Than The Mortgage

Opportunity cost is the loss of potential gain from other alternatives when one alternative is chosen, and it's something that rarely gets factored into the buy vs rent decision. Yes, moving can be a pain in the ass, but progress and career mobility tend to feel that way too. 

Whether or not you decide to travel the world is beside the point. Given that most of a millennial’s net worth is tied to his/her future earning potential, doesn't it seem insane to tie your fortunes to one neighborhood for the next 30 years?

3. Security is Risky (and getting riskier every day) 

The thing about the world we live in is that no one has any idea what’s going to happen a year from now - let alone thirty. For millennials to place our bets before we absolutely have to smacks of hubris.

4. We Never Own Anything Anyway

We just borrow it for a while. The sooner we realize this simple truth, the less of a rush we’ll be in to lock ourselves down. Instead of the buy vs rent decision, it’s better to frame it in the form of a question:

At this stage in your life, are you prepared to sign a one year lease or a thirty year lease

5. Home is a State of Mind

Jennie and I worry that a lot of people are making life altering commitments simply because they think that it’s what they’re supposed to do to feel “secure” and “established.” In reality, security can't be bought or sold - it comes from our choices. What about feeling established in your relationships and secure in the things you want? In the person you want to be? 


Our Takeaway


People get hold of ideas about how their life is supposed to turn out. It makes them think that they have to play the same game as everyone else, even when it doesn't suit them.

Do you know where you want to be for the next thirty years? If the answer is yes and a thirty year mortgage is your way of doing that, then don’t let this stop you. All we’re saying is that it’s okay to say you don't know - and act accordingly.

After all, a house is a house, while a home is something entirely different. It isn’t confined to one place; it can't be borrowed or bought. 

Home is the feeling you get when you’re exactly where you’re supposed to be. 

I remember a man in Salinas who in his middle years traveled to Honolulu and back, and that journey continued for the rest of his life. We could watch him in his rocking chair on his front porch, his eyes squinted, half-closed, endlessly traveling to Honolulu.
— John Steinbeck, Travels with Charley