- Jim and Fernanda Dorsey owned a home in Glendale, California for over 20 years, but wanted to travel after retiring in September 2019.
- They sold their home and furniture, but wanted to keep the money from their home sale in an account where it would grow and stay “untouchable” while they traveled.
- They opened a CD at their local credit union where their money would grow about 3% per year. With that money, they can restore their life when they decide to settle back in the US after traveling.
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For 22 years, Jim and Fernanda Dorsey enjoyed their home in Glendale, California. But for retirement, they needed something different.
Fernanda, 52, and Jim, 65, retired in September 2019 after long and fulfilling careers at Disney and in the clothing industry, respectively. They dreamed of traveling, and wanted to see the world without being tied to a home. They planned to spend two years traveling, writing their blog, and living life on the road.
“Our home was definitely our best investment,” Fernanda told Business Insider. But they knew it was time to let go.
“People would come to our house and say, ‘How could you even do this? Why would you just let go of all of this?'” Fernanda said. “We always felt very comfortable answering that question and saying, ‘It’s absolutely the right time for us because we have enjoyed having it home for 20-some years together and building it, but we’re ready for change.'”
The two wanted to travel long-term without caring for a lifetime of belongings. When they put their home up for sale, they also included the furniture. They sold about 80% of their furniture along with the home, allowing them to move the remainder of their things into a 10-foot by five-foot storage unit in Los Angeles.
Then it was time to figure out what to do with the money from the sale.
A CD was the right place to keep their cash
They didn’t want to be tempted with the money from the sale of their home while traveling, so they decided that opening a CD was the ideal solution to save the cash.
A CD, (certificate of deposit), is a type of savings vehicle that earns higher interest than a typical savings account — typically around 2% — but only if you leave your money with the bank for a predetermined amount of time, generally from about 11 months to 5 years. The interest rate is fixed, but if you try to take it out before the term expires you’ll incur a penalty.
“We belonged to a credit union, which was for us as a much more favorable institution to belong to than a typical bank,” Jim said. “We put it into a CD where it would make a little bit less than 3% over the period of a year. The equity for the house was was committed for a period of a year and untouchable.”
By storing the money in a CD for a year, the Dorseys would keep the money from their home sale growing without being able to access it. “We were constricted to the budget that we had prescribed for ourselves without saying, ‘Oh well, we can tap into the equity of the house,'” Jim said. “That was not going to be an issue.”
He continued: “We had already budgeted for this trip aside from whatever equity we had in the house. For us it wasn’t like, ‘Take all the money out of the house and travel with reckless abandon.’ We couldn’t possibly spend the money we got out of the house just by traveling. It would be ridiculous.”
For this retired couple, making their money “untouchable” gives them a certain amount of comfort while traveling through Europe. They know that it will be safe when they want to use it again. “We will still have this money, and we will be able to buy a house again,” said Jim. “You can always buy another house.”