This guest post from Holly Johnson 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 with all levels of financial maturity and income.
A few months ago, we were seriously considering moving. Frustrated by a few of the shortcomings of our current residence, we started looking for a way to upgrade.
Our current house — the one we have lived in for four years — is a four-bedroom, three-bath home with about 2300 square feet. It has a large living area and a play room and sits on a large lot. However, it doesn't have some of the things I've always wanted — a garden tub, a nice backyard that you can relax in, and a roomy kitchen with upgraded cabinets and appliances.
Because of the way our house was built and laid out, remodeling wouldn't make much sense. Our kitchen can't really grow in size, and there's no room for a garden tub in any of the bathrooms. Also, we can't change the fact that our yard backs up to several other back yards. It was beginning to look like we should just move to get the house that we really want.
At the same time that we were considering this, interest rates dropped to record low levels. All of a sudden, houses that were somewhat out of our price range moved into a range that we could afford. After all, a house with a mortgage at 3.5% has a much lower payment than a house at 6%, dependent on your credit score . Suddenly, a whole world of new options presented itself.
Our House Search
We began looking at houses. Large houses. Nice houses. Some had several acres with them. Others had large garages, fancy upgrades, and — yes — even garden tubs.
One house in particular stood out and we zeroed in on it quickly. I considered this house my dream home. With a long beautiful driveway, this country house had it all — 3000 square feet on five rolling acres, a creek in the back, and a nice kitchen with cabinets that had roll out drawers.
I could see us in this house. I could picture summer barbecues on the expansive deck in the back. A four-car garage could hold our cars and all of our stuff. I could even put my dad's boat in there so that my mom could finally park in her garage after many years of parking out on the street. Yes, it was all coming together. We could afford this house — our dream home. We could sell our current home and move into this larger, beautiful space.
We began crunching the numbers. The house payment would be about $1700 a month for a standard 30-year mortgage. We could afford this house and all of the maintenance that comes with owning five acres. We wouldn't have to change our lifestyle very much. After all, we'd been paying over the $1400 payment on our current 15-year mortgage…and that was with a good credit score.
That's when it hit me.
To buy this house, we'd have to move up from a 15-year to a 30-year mortgage. Even if we paid additional payments towards the principle on this new mortgage, we couldn't decrease its term to less than 22 or 23 years.
It was time to stop and think what this really meant to us.
If we stayed in our current home, we could pay what we were paying and own it free and clear by the age of 40. We could travel more. We could help our kids with college. We could have many years of owing nothing to anyone. It was at that time that we realized that having our dream house meant giving up our dreams.
Owning a piece of paradise came at a huge cost: our freedom. Owning our dream home meant working more and longer hours. It meant living at our means, not below them.
Needless to say, we didn't buy the house. We stopped looking and have grown stronger in our resolve to pay off our own house as quickly as possible. We cut more from our budget and started paying almost double payments on our current mortgage. At this rate, we will be debt free by the age of 37.
I drive by my dream home all the time. I can still see my family living there, playing, relaxing, and enjoying life. But, I know that I'm not willing to pay the price. I'm not willing to live more years imprisoned by my debt than I have to. I want off this hamster wheel, and — once I get off — I'm staying off for good.
So here we are, still in our imperfect house. I take baths in my regular tub. I put my dishes and pans away in spaces that make no sense for them. I try not to pay attention to the things that bother me. My kids are happy and safe here, and that's all that really matters. I may not get my dream house now, but with every month that goes by, I get closer to my real dream: I'm one month closer to becoming completely debt free.
Author: Holly Johnson
Holly Johnson is a credit card expert, award-winning writer, and mother of two who is obsessed with frugality, budgeting, and travel. In addition to serving as contributing editor for The Simple Dollar and writing for publications such as Bankrate, U.S. News and World Report Travel, and Travel Pulse, Johnson owns Club Thrifty and is the co-author of Zero Down Your Debt: Reclaim Your Income and Build a Life You’ll Love.