This guest post from Felix is part of the “reader stories” feature at Get Rich Slowly. Some stories contain general advice; others are examples of how a GRS reader achieved financial success — or failure. These stories feature folks from all levels of financial maturity and with all sorts of incomes.
I suspect I'm representative of a large group of Get Rich Slowly readers. Early on, my financial competency was average — I don't have a history of overspending, and I haven't overcome a huge battle with consumer debt — I just haven't always been great about saving and planning for the future.
I've spent the last six years improving my financial literacy and focusing on saving and planning for retirement. I do more than the minimum and less than the maximum, and I think I've achieved a good balance between enjoying money now and saving for the future. My primary non-retirement saving goal has been directed at getting positioned to buy a house. In October, I took the plunge.
The house was a responsible purchase (it's well within my price range and is a good fit for my lifestyle) that I've been planning and dreaming of for years. Yet, I'm finding my enjoyment of the purchase is significantly marred by the money mindset I've had for the last six years (save as much as possible! never let the savings balance decrease!). With every expense, anticipated or otherwise, I'm so focused on the financial factors that I'm missing out on the fun associated with this goal I've worked so hard to achieve.
A Home in the Woods
When I was in my early twenties, my parents gifted me with some money to match what they spent on my sister's wedding (the logic being they would not be funding my wedding). To me, at the time, it was a life-changing amount of money, and I quickly used it as a downpayment for a small, affordable, rustic cabin in the mountains of Western North Carolina. And like most of my historical financial decisions, it wasn't totally irresponsible, but it wasn't made with consideration for future costs associated with home upkeep, not to mention road and vehicle maintenance associated with the rustic nature of the location.
I spent the next five years struggling to tread water financially. My monthly expenses included a small mortgage ($650 including escrow and PMI), a car payment ($100), utilities ($100), and a student loan payment ($130). Beyond that, there were fuel charges associated with driving a four-wheel drive vehicle in and out of the city, as well as any food, clothing, and entertainment costs, which were relatively low for a single guy working full-time, attending graduate school part-time, and doing little else.
When I graduated with my master's in Library and Information Studies in 2005, it became apparent that my degree was worth much more in the North East. On top of that, I was worn out from the stress of working all the time but being unable to make ends meet, let alone grow my savings account. So I began applying for jobs everywhere between New York and Maine, and I put the cabin up for sale.
Luckily, both actions produced results, and I sold the cabin for twenty percent more than I had paid for it and headed to Massachusetts where I'd found a research position that fit my interests and goals. I rented a small apartment in Providence, Rhode Island (the closest city), and I spent a year or two exploring a different part of the country, working like a dog, and building a solid savings account. After a couple of years my girlfriend joined me, and together we've spent the last four years recovering from home ownership and loving the leisure time and financial relief renting affords.
Saving for the Future
That savings account I've been building has always been ear-marked primarily for my next home purchase, with the idea that the next time I buy a house, I'll be prepared to handle all that comes with it. And as my relationship with my girlfriend has become increasingly serious, we mapped out our future plans together as something that looks like this: we would move back to the South close to our families and buy a modest house that accommodates her love of company and my extreme introversion without being overly large or opulent.
Up until last spring, that had been an abstract conversation. We were happily enjoying easy living; we both work hard, but little else hampers us, and a majority of our leisure time looks like a vacation to our friends and family who are raising children and tending homesteads. Everything changed when we got a call from our then-landlords who told us, apologetically, that they would not be renewing our lease because they needed to sell the property unexpectedly.
That house was the first place we had really made a home together. It was a nice size for us, it was in a great location, and it was where our relationship had really gelled. It was also where I had built my first garden in years — a modest raised bed that fed us from March to October and brought me an enormous amount of pleasure and pride.
So when we got word that we were losing our home, we signed a lease for an affordable single family in a less desirable location and set our plan of moving south into motion. I worked out a plan to keep my job and work remotely, and we booked a plane ticket in early fall to explore some towns and neighborhoods in Western North Carolina with a realtor in order to determine what kinds of properties we could expect to afford. The trip was merely a fact-finding mission, to determine whether it made sense to buy now or continue renting and saving.
Going into that trip, our ground rules were the following:
- No bad real estate decisions based on emotion (we'd both been down
- We were buying a house to have a stable home, and not as an
investment (we'd learned from the real estate market crash).
- Look at properties priced well below what we can afford, knowing we
can use any surplus to maintain and improve them.
Quite unexpectedly, at the end of a long day of seeing disappointing properties, we stepped out of the realtor's car onto thirteen acres containing a small cabin and a barn that was exactly what we wanted. The cabin was modest, the barn had the potential to be built into an office/guest house, and the property was unbelievably beautiful. And, we learned quickly, it had been on the market for two weeks, shown many times, had already received one (low) cash offer, and the realtor was anticipating another one that weekend.
A Bold Decision
Very quickly we were thrust into discussions about making drastic changes to our lives that we had only casually considered previously. After two sleepless nights, a second day spent looking at houses that did not fit our needs, a second showing of the property in question, hours spent reviewing account statements and budgets, some helpful talks with our realtor, and some talks between us about what we'd really be getting ourselves into (and what we'd be giving up), we woke up early on the last Sunday of our visit and put together an offer.
The offer was accepted, and our monthly mortgage payment (including escrow) would be $400 less per month than our rent had been for the last two years. The down payment, for which my savings account had been created and intended, was smaller than I had ever expected it would be (the house was well under budget), and I was pleasantly surprised by the remaining balance in my savings account after I had written the check.
I had anticipated much of the stress moving, and moving to the country after enjoying city living, would bring into our lives, but I had not prepared for how challenging spending my savings for the first time in six years would be.
Unfortunately, after living six years with the mentality that the balance of my savings account should never decrease, I find little consolation in knowing I planned responsibly for this home purchase and am now carrying out the goal of buying a house without being totally strapped. We've owned the house for a couple of months now (though we're still in Rhode Island finishing up our obligations here), and spending money on it hasn't grown any easier.
I've opted to go ahead and turn the barn into a home office now; that project is an inevitability, and having the work down while we're away saves us construction headaches later, and saves me costs associated with renting office space in the short-term. It's also a dream come true; I'll have a custom office/workshop that has the potential to become a nice guest house when we decide to spend the money to add plumbing. The project has been fun to plan, and I'm working with an affordable, talented contractor who has made every step of this project nearly seamless. And yet, every step is darkened by my reluctance to spend money, even when that spending is planned responsibly and doesn't result in negative financial consequences (beyond the negative entry in my bank book).
I'm optimistic that this dark caste will lighten some once we're at the house enjoying our purchase, but ultimately I think I'll need to alter my approach to finances to really enjoy my house. In a tenuous economic climate where there is no shortage of stories of individuals who have lost everything, it's tempting to plan for the worst and scrimp and save every possible penny. And honestly, I get genuine pleasure out of the security associated with a high balance in my savings account.
However, I know that pleasure is not as rich as the satisfaction I get from working the land and living some place that feels like home. That said, I struggle every day with actually enjoying what my planning and saving has made possible in my life, and that paradox is by far the biggest challenge associated with my increased financial literacy. It's also an indicator that it's time to rebalance my priorities and focus on my holistic happiness literacy, so that next year when I'm preparing the land for the garden I've saved so long to obtain, my enjoyment won't be tarnished by account balances.