An Eventful Afternoon in Platja d’Aro

After a brief hiatus, we picked up our travels once again and visited our 2nd favorite beach town along the Costa Brava: Platja d’Aro. Readers will remember our favorite is currently Tossa de Mar, which we have visited multiple times over the last year.

After driving around for quite a bit in search of parking, we found an open “spot” in an undeveloped construction site. It truly amazes me every time I think about it. The number of people driving around looking for parking at any given moment is ridiculous. I remember reading about a statistic that close to 20% of cars on the streets of Paris at any given time are not trying to get anywhere, but are simply looking for parking. I would imagine that number to be close to the same for Barcelona as well.

In any case, once we parked, we decided to do a short hike. Most beaches in these coastal towns tend to be connected by way of a rough path weaving along the coast. These paths tend to be unpaved and quite rudimentary, with a LOT of ups and downs to navigate the changing terrain. We had probably walked close to 30 minutes when I realized my wallet was missing. It was entirely possible that I had forgotten my wallet in the car. But, it was also equally possible that I had dropped it/had it stolen along the way. For the life of me, I couldn’t remember whether or not I had taken the wallet from the car. Not being one to take chances, I opened up my banking app and conveniently canceled my cards from my smartphone. Unfortunately, my wallet also contained my driving license and other government issued IDs that can be a headache to replace.

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We retraced our steps, leaving my phone number with local restaurants along the way in case someone happened to turn in a lost wallet. By the time we reached the car, we were soaked in sweat, tanned from the scorching sun overhead and tired. We had maintained a brisk pace during the hike back hoping that if it had slipped out of my pocket, we might find my wallet before anyone else does.

Much to our relief, we found it sitting on the dashboard of the car. We grabbed my wallet and headed back to the trail, hiking 20 minutes till we reached a beach we liked. We bought ourselves some cold sangria from a chiringuito (beach shack) and were ready to relax when we found out they were out of rental umbrellas and loungers. As luck would have it we had a beach umbrella in the car, but were too exhausted to make the long and tiring journey back to the car. Eventually, we got lucky and found a shaded area right next to the water and laid out our beach towel.

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I must confess that all these mishappenings had left me a little grumpy. The Honey Bee, being the beacon of positivity that she is, kept our spirits up. Not even my grumpiness could hold out against her bubbliness and soon we were both enjoying ourselves again. She brought out her sketch book and started painting the landscape. Meanwhile, I sipped my drink and decided to take a little siesta.

It was a beautiful afternoon in a veritable paradise, with the sun setting behind us, our feet buried in the soft sand and the soothing sound of the waves lapping gently against the beach.

Day Trip to Sitges

Since it’s a long weekend, we decided to make the most of it and take as many day trips as we could.

We just got back from a great day trip to Sitges, a beautiful little beach town about an hour from Barcelona. Apart from being well-known as one of the most gay friendly places in the world, Sitges is very popular for its beaches, nightspots and historical sites. More than once it has been referred to as the St. Tropez of Spain (in reference to the expensive property prices) and Ibiza in miniature. Once you get there, it doesn’t take too long to realize how heavily the local economy is dependent on tourism.

Given that we are in peak summer season, the town was packed. Quite a contrast from the peaceful and sparsely populated version I have gotten used to during my other visits throughout the year. You can also tell based on how long it takes to find parking. Driving along the beautiful beach front promenade, we found a spot that was probably a 20 minute walk from the main beach. We’re not complaining though; it was nice to walk along the beach, taking in the beautiful waters and enjoying the gentle breeze under the summer sun and the palm trees.

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The beachfront promenade is an excellent walk, lined with little restaurants, cafes and ice cream shops. This time, a close friend joined us for lunch. The 3 of us sat down at a wonderful waterfront restaurant. The restaurant, which I would recommend to everyone, is called La Santa Maria– after the largest ship that Christopher Columbus used in his first voyage. We ordered the best and most mouth-watering tomato soup I have ever had. We also ordered some bread, accompanied by a special butter. If you ever do decide to visit, you have to specifically ask for this butter to be brought to you. Called Aioli butter, it’s one comfort food that you just can’t get enough of. You could lather the entire bread with this garlicy treat, and it still wouldn’t be enough. We also ordered some lip-smacking spinach lasagna and garlic mushrooms. Now, this doesn’t happen often, but we were extremely satisfied with every single thing we ordered.

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We followed up our heavy meal with a quick visit to one of the many ice cream shops. I got a delicious strawberry cream and the Honey Bee got her regular stracciatella, both perfect to beat the heat. We wrapped up the visit with a leisurely stroll around the beachfront, enjoying the scenic views of the beaches, churches and the some of the town’s history.

This is my fifth happy visit to Sitges, and we’re hoping for many many more.

 

 

 

Day Trip to Pals

Last weekend we visited Pals, a medieval village with a population of around 2,500. Situated along the beautiful Costa Brava, you can walk through this picturesque village in 10-15 minutes.

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Very well-preserved and still an active town, most structures here are small and made of stone. The streets are narrow and cobbled and you can’t help but be taken in by the quaint homes. It’s exactly the kind of place that comes to mind when you think of a medieval town. Everywhere you turn, you see beautiful arches, bucolic windows and stone balconies. I don’t think we saw a single brick structure in the entire town. Walking through, we couldn’t help but feel like we were on the set of Game of Thrones.

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In fact, we were lucky enough to even encounter a small troop performing in the rustic town center. We saw dueling knights fight in front of a king, queen and other members of a royal court. They fought with their heavy swords and shields in full armor until one was defeated and fell to the ground. The winner was felicitated by the royals and rewarded. You might notice that the pictures are not up to the mark. The thing is that we forgot to carry our camera and hence had to make do with lower quality pictures taken on our cell phones.

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We had lunch at a well rated local Mediterranean restaurant we found on TripAdvisor. We enjoyed some pizza and fresh mozzarella salad, accompanied by a fruity sangria made of Cava, the local equivalent of champagne.

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Situated close to the town is the Playa de Pals. This picturesque beach, though fairly crowded, has been fortunate to escape the onslaught of commercial tourism. We enjoyed relaxing on the beach under our umbrella and reading. When it got too hot, every so often we took a quick dip in the water to cool off. Unfortunately, unlike some of the other beaches we have visited along the Costa Brava, the water here was not transparent. Not to say it wasn’t clean, but I am more comfortable being able to see through the water I am entering.

All said and done, we spent around 8 hours in this paradise and had a great time. We were also extremely fortunate to not have encountered any heavy traffic along the way and back.

Next, we’re planning on visiting another gem along the Costa Brava. More about that in next week’s post.

A Peak into the World of Homeownership

This is a topic of great personal interest to me. It’s something I’ve discussed with family and friends on numerous occasions, and it’s something that I’ve looked into quite a bit. I’ve even touched upon it briefly on this blog in the past.

It truly amazes me how many people choose to buy a house simply because that’s what the world, or their real estate agent tells them to do. BHTraditional wisdom says that buying a house is the smart thing to do. The thinking has always been that you buy a house with a mortgage and eventually, once the mortgage is paid off, the house is all yours. It’s called building equity.

This is presumably better than renting because at the end of the mortgage, you own the house and can simply sell it to recover most of your money. In the case of renting, you are not working towards owning the house. You are simply paying on a monthly basis for the privilege of being able to live in that house.

On the face of it, it all seems to make perfect sense. Why waste money renting, when you can use that same money to build equity and eventually own a valuable house? But things are not always as they seem. There are a number of factors underneath the surface that need to be considered.

Let’s run through an example. Assume you buy a house for US$ 250,000. You make a standard down payment of 20% (=US$ 50,000). In addition, there are closing costs that need to be paid. Conservatively, let’s say these costs are around 3% (=US$ 7,500) of the home value. So, the total value of your mortgage is US$ 200,000 + US$   7,500 = US$ 207,500. Like most people, you get a 30 year mortgage with a moderate annual interest rate of 5%.

The bank gives you the money, using which you buy the house and start to live in it. Every month, you pay the bank US$ 1,142 towards your mortgage. Annually, that adds up to US$ 13,704.

Now it starts to get interesting …

You realize you have spent so much on buying a house, you should probably protect it. So, you buy homeowner’s insurance. This typically costs 0.3% of the home value and is paid annually.

A few months in you realize that the community you live in has its own dues. Typically, homeowners’ association dues go towards the upkeep of the hhccommunity. Let’s assume 0.2% of the home value annually.

A year in, you get a bill from the government telling you your property taxes are due. That’s right. You have to pay taxes annually on the value of your house. Conservatively, let’s say 1% of your home value annually.

Life starts happening: your washing machine breaks down, the drain gets clogged and parts of your home suffer small amounts of water damage. You might also have a number of small repairs that need to be carried out. In addition, routine maintenance is also required like mowing the lawn, changing the lights, cleaning the air conditioning filters, etc. These costs are typically in the range of 1.5% the annual home value annually.

So, let’s review how much we spend annually on the house:

  • Mortgage payments: US$ 13,500
  • Homeowner’s Insurance: US$ 750
  • Homeowners’ Association Dues: US$ 500
  • Property Taxes: US$ 2,500
  • Maintenance, Repairs, etc.: US$ 3,750

That’s a grand total of US$ 21,000. Now, you might say to yourself, that this is turning out slightly more expensive that you had thought, but it’s okay because you’re building equity. But have you thought about the alternative? Over a 30 year period, the total cost of buying and owning that US$ 250,000 house add up to US$ 680,000. That’s almost 2.7x the cost of the house. Renting for 30 years @ US$ 900/month would have cost you US$ 324,000 and you wouldn’t pay anything else. The landlord would take care all of the maintenance, repairs, property taxes, etc. That’s a saving of US$ 306,000. If you invested these savings at 5% annually, that’s another cool US$ 15,300 in your pocket every year.

Now, you might be wondering how you ended up paying so much for the house. Well, let me give you a breakdown.

You paid a total of US$ 404,879 on your mortgage. That’s right. Over the 30 year period, you Cost Splitpaid US$ 404,879 on your US$ 207,500* mortgage. Even though 5% interest might seem low, it adds up to almost US$ 197,000 over the 30 year period. And it doesn’t end there. Even after having paid off your mortgage in full, the ongoing expenses continue. Between insurance, property taxes, maintenance, etc., you will continue to spend a minimum of US$ 7,500 every year.

As for the equity you’ve built, let’s take a look. You want to sell the house, but before you do, remember that there are costs associated with selling your home. These so-called closing costs are about 5% on the value you sell your home for. All things considered, the only way you can make a profit on your home is if its value has increased 266%. That means your home has to be worth at least US$ 662,500 30 years after you bought it. That’s an increase of about 3% annually. I’m not saying that’s not possible. It’s possible that it might even increase more than that. But, there also exists the possibility that the value might decrease, and if market conditions are bad, you might even end up selling it for less than you paid for it. While a lot of people have made a lot of money off their homes, there are also many who have lost everything because of it. In an ideal world we would all have enough money to simply buy a house outright without a mortgage, and the economics would then make a lot more sense.

I don’t mean to discourage anyone from buying a house.  Everyone’s situation is different and everyone needs to evaluate for themselves whether they are taking the right decision. The point of this blog post is simply to help increase awareness of all the moving parts and intricacies involved in buying a house and not get swayed by popular myths.

 

 

 

*For the sake of simplicity, I have:

-rolled the initial closing costs into the total mortgage

-ignored the cost of furnishing the house

-ignored the potential tax implications of selling your house at a profit

-ignored the effect of inflation

-ignored tax deductions you might receive for interest on your mortgage because more often than not, people don’t qualify for the deduction, and if they do, the deduction is relatively minimal

 

 

The Great European Summer Shutdown

Every year as August comes around, Spain, and most of Europe, go into low gear. Things start to wind down, and people start talking about vacations. Traditionally, August is when peak summer hits across Europe and people take their annual vacations.

staIn Spain, most people are obligated to take a certain amount of their annual vacations in August. Some companies shut down entirely for the month. For those that choose to remain open, the jornada intensiva (meaning intensive working day) kicks in and the workday changes. The day starts an hour earlier, and around 3PM people head home for a siesta, or to the beach, as the case may be.  As one of the few who chooses to work in August, I can tell you it is probably the most efficient time of the year. Thanks to almost no one being present in the office to disturb you, you can get a LOT of work done. Plus, since we don’t vacation during peak tourist season, we save a whole lot of moolah on flights and hotels.

Out of curiosity, I investigated and tried to find out the reason behind this summer shut down. A lot of people say it was introduced by the left-wing populist governments starting with France in 1936. During/after World War 2, the rest of Europe followed suit. EHSome say it was a bid to keep the people happy so these governments/dictators could stay in power. Others say that the summer shut down has to do with the heat. It gets extremely hot in August and working becomes very difficult if you don’t have an air-conditioned office and even more so if you are a blue collared worker.

Whatever the reason for its origin, people have gotten so used to the status quo that the very thought of changing it would be heresy. It would cause a lot of discontent and resentment. I speculate of course, but any government that dared to change it would probably never return to power again. No wonder then that when the numerous crises have hit Europe (1993, 2007, 2011…) or its companies (e.g. Volkswagen 2015) during the summer, the politicians, bankers and CEOs have been in such a foul mood. I don’t blame them though; who wouldn’t be after having had their summer vacation canceled?

The good thing about all of this is the better quality of life. The next logical thought though, is about the obvious downside- decreased productivity. I can’t help but try to draw some kind of parallel between the way things are (going) and the fall of the Roman Empire.

But for now, I think I’ll just hit the publish button and leave you to ruminate on that, while the Honey Bee and I go relax at the beach.

Hasta luego!