Our dream home or our dream life?
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 backyards. 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 Dream 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.
The Aftermath
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.
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There are 146 comments to "Our dream home or our dream life?".
I love this article. I especially like the moment where your emotions (5 acres! expensive deck! garden tub!) are trumped by the rational realization that this purchase isn’t about the monthly payment but the quality of life of your family and your kids. Debt free by 37 is something to be proud of. Twenty-two more years of mortgage payments leaves something to be desired.
I think it’s human nature to always want something better for ourselves and our families. But sometimes what’s better for us is to look at the numbers without emotion and decide if it’s truly worth it. I’ve tried to “expose the numbers” to my sister when she wanted to purchase a new car. Your scenario applies to countless situations where the monthly payment is possible, but needs some critical analysis. Thank you for sharing your story.
Kudos! I think sometimes we get hung up on the affordability of a monthly payment rather than the long term costs. I love the “wake up call” moment in this post — a good lesson for all of us!
I have to say the house described in this post sounds like a paradise to me. I’m glad the OP appreciates how lucky she is 🙂
Yes- a reader story with Actual Numbers in it!
Yes! And a reader story that is focused on getting rich slowly. LOVE IT!
What a great lesson in balance.
Its been my experience that my “dream” thing always changes as soon as my dream is is realized. I tend to take advantage and forget the awesome “dream” things I do own, and I suspect I’m not the only one with that problem.
For instance, after the dream home, there would be dream furniture to fill it with, a dream man cave with a 60″ TV, a dream car for the garage. Once you are materialistic and have “stuffitis”, you are never happy. And once you fill the dream home with your stuff, you need more room, and a bigger better dream home.
I’m starting my dream job tomorrow, and in a few years I bet I’ll be complaining about mundane things and need a reminder that this is what I asked for. Its just human nature. We must remind ourselves to be grateful daily.
Congratulations on the new job! Enjoy!
That sounds to me like what happened here. The OP has only been in her house for 4 years, but already has a lot of dislikes. It is quite a large house and on a lot of land, yet she wants more. Like you say, after moving, it’s likely that she would want even more. It’s fantastic that she realized this in time!
I wish I had thought of it like this when we bought our second home. We moved from a $350 a month payment to $1000 a month. Our new house seemed so wonderful and spacious fifteen years ago, but now it’s too big for the two of us after our kids have flown the nest. The little old house we started with would be just fine.
Jon,
This sounds just like the decision we made about a year ago. Moved from a small house that was almost paid for, to a much larger house (more than twice as big). Our kids are still fairly young and we wanted a bigger place to stretch out. I am almost certain though, that we will eventually move back to the smaller house when the kids move out. Rather than selling the house, we kept it as a rental. The renter pays all the bills and we get to pocket the rest.
Now a word of caution to whoever reads this and wants to do the same thing. The numbers in our case worked. The insurance and taxes are low enough that we can make money. I have spoken to quite a few people that want to do something similar, but the numbers just wouldn’t work.
Great post! Ever think about buying the upgraded appliances yourselves and putting them in the house you already own?
I love this post. I am currently in the home purchasing phase. I needed the encouragement to make smart financial decisions.
I have been doubting my decision to buy a smaller house for our family of 5. I wanted a single family home but a townhouse is what meets our needs. I am determined to have my “dream life”. I want to spend time with them, I want us to travel and I want us to have money in the bank.
I keep reminding myself that it is better to have money in the bank than to look like I have money. Thank you for sharing and putting yourself out there. I am going to keep telling myself “dream life” every time I get second thoughts.
Because we didn’t move to a newer, easier, better-neighborhood house, I was able to quit my job when my son was having problems adjusting to school.
There’s no amount of nice house that would have made up for being able to do that.
Very nice! You sound extremely financially savvy for someone your age. Congratulations on solving a very need-want life problem. Life is really not about “things”.
I love this approach and think it’s a really practical way to look at life and not buy away your future. Related to the post above, since your mortgage is less than the “dream house” and committed to staying in your current house, it seems like there would be some good, small- to medium-sized investments that could make a big difference. New, space-efficient cabinets and new appliances could be justified
Totally agree, with everything you’ve saved from not taking on another 30-year mortgage, you can justify some renovations that make your current home more livable and enjoyable. A new kitchen can really transform a space and doesn’t have to cost a fortune.
Totally agree. You could bring in a kitchen designer (or even a good organizer) who may be able to find some relatively inexpensive solutions to your kitchen storage issues. Or just get some magazines! You can upgrade appliances one at a time and/or with floor models with small imperfections that save lots of money. Little investments that help you enjoy and appreciate your home are worth it because they increase your satisfaction along the way without derailing your trek to your goals. P.S. I will trade you our dust gathering soaker tub for being debt free before 40! 🙂
Sonja B,
That’s exactly what we did with our kitchen. I found a magazine picture that had our same basic floor plan, and with a little elbow grease & bargain hunting, our kitchen now looks just like the magazine.
I discovered along the way that it was the color scheme I liked best – not necessarily the exact finishes themselves. For example, I found a great, upgrade laminate countertop that looked just like the granite in the picture. And, we bought off-the-shelf unfinished cabinets, installed them ourselves (it isn’t really that hard) and then painted them the color we wanted.
All in all, we tripled the storage space in our 7’x14′ kitchen, didn’t have to knock down a single wall, and spent less than $3,000. It looks amazing!!
Note: Appliances are only being replaced as-needed, and we always buy scratch-dent models. MUCH less expensive that way!
I fight with the same thing but on a different scale. We live in a townhouse that is plenty big enough for us now but we will need a slightly bigger house when we have kids. So what we decided to do was live here until our first kid grows up and really needs their own room then buy another house in town while renting out the townhouse. When the kid(s) are all grown up we’ll then move back to the townhouse and rent out the bigger house and by then hopefully we’ll have two houses with no mortgages! YAY!
That sounds like a great plan. Other than the fact of being a landlord it seems like that should be what every couple does.
What a great post! Loved the way you described the dream house / life – it made me want it too!
I’d like to know though why you totally stopped looking? Maybe a house could come along some day with all of the things you want at a cost that leaves you in the same position financially. That would be quite a win win.
You sound like you made the right decision for you. I am not sure if you considered a larger down payment from the proceeds of selling your old house and some sort of savings and then getting a shorter amortization period but you did what was right for you.
The added happiness and freedom from the bigger house is worth something but you decided that it wasn’t worth the extra happiness and freedom you would get by having no debt and being able to travel a bit. For others it might be the other way around, to each their own.
Great article, this was my favourite reader story in recent memory.
Great story with a great decision. I purchased a house in a historic neighborhood I love for cash. I could have bought 5 x the house, but elected to not have a mortgage. I then began to deconstruct walls etc. and slowly make it a smaller version of what I wanted. I just finished it. I don’t owe a dime on it. It is a jewel of a home, and people who had seen this house before the remodel cannot believe the use of space. So what I am saying is: great choice, not owning a mortgage is an amazing feeling, worth any sacrifice you are making, but you may want to conceptualize in the future little things you can do here and there to tweak your home and make you feel as if you have a piece of the dream as well. Well done!
We are doing the same thing – renovating our town house to maximize its footprint (~1600 sq ft for our family of 3). It is amazing what an efficient use of space can enable you to store without feeling cramped. For example, we completely gutted and renovated our kitchen for about $11,000 (we, mostly my husband, did the majority of work ourselves) – and although we did not expand the footprint at all, by redesigning the space the kitchen went from useless to fantastic.
Wow! We just did the same exact thing! This story was amazing and really hit home for me! Last month we put our house up for sale and got a full price offer. So, feeling so excited, we began looking for new construction homes with four bedrooms (we have twins plus 1 kid). We were moving from about a 1300 square foot house to about 2000 square foot house. However, our house payment would have gone up about $500 along with putting every dime we had from the sale of our house as a down payment. Plus, we were looking at possibly dipping into our twins college fund for more of a down payment in order to lower the monthly payments. But, it didn’t lower it by much.
Anyway, we decided that if we stayed in the house we were in we could be debt free by age 40. If we moved, we would maybe be debt free by the time of retirement.
So, we decided to stay where we are and pay off the house early and live debt free. Because our home is our only debt.
We decided that our TRUE DREAM was not a house, but to live debt free and have more financial security and more freedom. I am so glad we are not alone in this mind set!!
http://adventures-of-sam.blogspot.com/2012/07/perils-of-keeping-up.html
We are watching many of our friends take advantage of the down market and low interest rates (we are also trying to take advantage of the low interest rates by refinancing to a lower rate and shorter term).
It is a weird to watch folks we consider peers upgrading to 8000 sq feet.
Flashback to 2005-7, ARM and interest only mortgages. But then I also flashback to 1982 when my sister lost her house with an 18% mortgage…
I think a good general rule of thumb is “could I afford this house if interest rates went up 3-5%”? Cuz they ain’t going down any time soon.
You probably wouldn’t have used that garden tub very often anyway. Now that you’ve made your choice, though, why don’t you treat yourself once in a while to a night in a nice hotel room that has one?
I’m confused by the discussion of the kitchen. Maybe I just like small kitchens, but I find it hard to believe that you can’t renovate a kitchen in a 2,000+ sq. ft. home to be to your ultimate liking. Can you tear down a wall to open it up?
We had a similar dilemma this past year. Our wants for our new home were more modest. We just wanted a 3 bed 2 bath home instead of a 2 bed 1 bath home. We ran the numbers, and ultimately an addition was much cheaper than moving. Even spending $75,000 on the addition meant that long term we will have a much smaller mortgage and be able to pay it off much sooner than if we had moved to another property.
Right now it is a financial stretch – my husband has been writing checks for weeks now for $15,000 here, $17,000 there. But if we accelerate payments on the HELOC, in 4 years, we will have an $870 mortgage payment. And that includes taxes. This is a great comfort to me in my mid thirties, because even with job loss we could probably scrape together that money by working minimum wage jobs.
The problem with large mortgage payments based on your current salary range means that your living situation comes crashing down if you lose that high paying job.
Congratulations on choosing the more secure choice that lets you mentally relax.
I am the OP!
To answer your questions:
Yes, we have thought about just upgrading our house that we live in. We may do it in the future and that is a really great suggestion.
We stopped looking because we are trying to avoid temptation. It’s so easy for us to give in to lifestyle inflation and forget our long term goals. It has happened to us before…when we upgraded from our “starter home” until the home we have now.
I admire you for your willpower.
I too LOVE a nice big tub, however our bathrooms did not have the space for a “garden” tub.. We did add a tub with the same 5feet length but it is almost twice as deep as the old one. Very nice and still under 1k in remodel costs.
Exactly. When we remodeled our bathroom, I really wanted a garden tub. Not a chance it would fit. So instead I got the biggest deepest tub that would fit into the existing space and I am SO happy! The tub is huge compared to what I used to have and gives me the “luxurious” feel I wanted.
~sigh~ I’d love a tub, period! One more thing to look for in our “forever home” when we eventually buy.
For now, whenever I go to a hotel though I really enjoy living it up in such nice (in comparison) accommodations. 🙂
Okay, I’ll be the bad guy : (
I really think you need to consider what exactly is at the end of the alleged rainbow. Imagine tomorrow you paid off your mortgage and were debt free. What would change? There are two things that would change:
1. You would clear the mental boundary of being in debt.
2. You would no longer have to make payments (though you would lose the tax benefit).
While I’d love to not have a mortgage….what else would I do with the money, aside from try to accumulate more? To what end?
I know this goes counter to the mentality of the typical reader here or the purpose of this blog but…ever hear the old saying, “When you die, you won’t say “I wish I’d worked more!”” (I’m paraphrasing obviously) – Well, the same can be said in this situation, “When you die, you won’t say “I wish I had lived even further below my means.””
Is the goal to quit working and just travel the world in tents for the remainder of your life, starting at age ~37? Call me crazy, but that would seem to get old real fast to me….
I’d trade that opportunity for the opportunity to move to a nicer, bigger house in a better school district for my kids, so that I can spend 18 years in it building wonderful memories and sending my kids to the best public schools (where I live, the better the school district the higher the housing prices).
Flame away : )
I am not offended at all!
There are many reasons for wanting to be debt free- some psychological and some practical. The most important reasons are that we want to travel abroad with/without our kids and want to free up income to do so. We are also planning on retiring early and paying for our kids college.
I don’t really think that there is a right or wrong answer in this situation. Being debt free is great but having a mortgage isn’t a bad deal either. It’s just a matter of persnal preference and each person has to decide what is best for them.
Very nice article. For Jd’s benefit I’ll say that the garden tub (which I have and which IS nicer) is both larger and circular shaped. its also higher and generally has a seat. I have severe arthritis and could never in my wildest dreams get out of a regular but, but can get out of my barden tub.
Oohh Mark – I have to disagree on the mortgage payment tax deduction. . . .dollar for dollar, there is more return (tax deduction speaking) in gifting $$ to a charitable organization than paying mortgage interest and then deducting it. I also think there is so much to learn in travel, rather than sitting in a classroom in the best school district.
Unless you are planning on traveling full time- I totally disagree. My children lived abroad for five years. They traveled widely. They also attended excellent International Schools in the process. The travel gave substance to their learning, but the schools were the foundation on our bedrock family.
I might not die wishing I had lived even farther below my means — but I’d like to avoid feeling that way for the last couple of decades of my life 😉 Retirement worries me.
We paid off our house when our oldest was in high school. That enabled us to pay their college tuition. Neither of them have any loan payments that seem so devastating. They both have jobs. They also know how to live below their means.
Mark, I’d like to pay my mortgage off early for several reasons:
1) I lost my job in 2008. I was able to get another one in six months and my savings tided me over. Had I not found another job, having no mortgage would have helped stretch my savings further.
2) I can sock the money that would have been used for a mortgage payment into my emergency fund/retirement fund.
3) I can sock the money that would have been used for a mortgage payment into a vacation fund.
4) I can sock the money that would have been used for a mortgage payment into an account to fund a donor-advised fund at Fidelity, and give more to charity.
5) I can skip the donor advised fund route and just give more to charity.
6) I can contribute more to my niece and nephew’s college accounts.
7) I can budget for some smaller pleasures–such as going out to eat a little more often.
Basically, the money freed up allows me all sorts of options for me. Knowing that it’s paid off and won’t be foreclosed on would also help my peace of mind, especially if I lost my job. If I had to work for a great reduction in pay, not having a mortgage payment would make my life much easier.
Pamela, those are great reasons! I like the way you think. I love the thought of having options and so much flexibility!
What an incredibly engaging post, a delightful read. The title was fitting because it framed the author’s dilemma nicely. Holly’s A-ha! moment was especially articulated well.
It is so easy to conflate extravagance with necessity. People need shelter, food, and in most instances transportation. People rationalize their indulgences all the time in those areas.
In the name of entertaining, families overextend themselves by buying bigger houses with sprawling backyards. Spending time with friends and family is a joy, but someone can stay at a hotel, sleep on the couch, or make a pallet on the floor. Out-of-town guests can be taken to the lakefront, hike a mountain, read in a beautiful park. This notion that one’s living quarters must be resort like, able to accommodate every hedonistic pleasure, keeps one on the proverbial hamster wheel.
Same thing with transportation, some individuals refuse to buy a used car even though there are a host of reliable options. Debt becomes not only a dangerous habit but a lifestyle. Exorbitant car notes leave households with very little discretionary cash, it is not likely they can save for the next car or even bring a sizeable down payment to the table.
My dentist mentioned that some clients are willing to spend a lot of money on cosmetic services but neglect to get a root canal or scaling. Also, vacations need to be put in perspective, is it wise to go on vacation when someone needs dental care, glasses, have not went to the doctor in years.
There’s this wholesale abandonment of substance for superficiality. Building wealth long-term slowly means you have to be internally driven and validated – because your success is not always on display.
I wish my mortgage were $1700/month – it’s over twice that, and my house sounds more like your current house than your dream house, except that it’s in coastal California. I can only assume yours isn’t.
But if you lived somewhere where housing was cheaper, you might not be making the same high salary. Holly probably doesn’t earn what you earn.
I think salary and cost of living are all relative. I could move out West (Alberta, for example) and any gain I make in salary would be lost in the higher cost of living. Right now I’m trying to look it in proportions. Where I live now, housing costs about 28% of my take home pay. (I rent and I’m single.)
If I moved, could I lower that proportion or would it be higher? That’s the number I need to think about.
I know, but I still can’t help but be a bit shocked when I see numbers like that, it’s more house than mine on WAY more land than I have for 1/2 the price.
One nice thing about living in a high-cost-of-living area is that if you ever need to leave, you can end up with a ton of cash in your pocket if you move to a cheaper house. Assume I pay off my house someday, and it’s still worth what it is today, and I want to retire and move out of California. I could sell my house for over half a million dollars, buy a house somewhere else for less than half that, and put $300k in the bank. This isn’t an option you have if you own a home in a less-expensive area. It’s one of the reasons that I think living in a high-cost area is totally advantageous if you can get a salary increase to match.
I agree with this. It’s one of the multi-horned dilemna we find ourselves on. If we were ok living where we are, we’d be in great shape with a cheap housing market. But as it is, if we can’t get the hell out of this town until retirement, we’ll be looking at higher expenses in retirement than we have now, and that is frightening.
lol. I’m a little shocked too now that I see the numbers. $150K would buy a needs-some-serious-updating one bedroom condo where I am, and I’m not even in a major city like Calgary or Toronto.
You make a good point about being able to sell and move somewhere with a lower cost of living. I’m waiting to see if the markets here cool before I jump in, as it would be a “starter home” I’m looking for. (Why buy a family home when it’s just me?) At least you guys know your bubble has burst 🙂
Yep.
My parents sold a very nice house in small-town Iowa when they retired. You would cry to hear the price. But it limits them in terms of where they can settle down now (they want to be out of the snow).
Family friends went the other way – sold a tiny condo in Chicago and bought a HUGE house in Iowa when they had growing kids. It’s a lot easier to go that direction.
Oh, yes, we have lots of Californians who did that where I live. Sold their expensive CA homes and moved up to WA where they could buy twice the house—-only problem is they drive the cost of houses up for the locals because they’re all, “2,000 sq ft for $300K! What a steal!”.
I think that is a great way to look at it – my house is about 2000 square feet, 3 BR, 2 Bath with 2 garages on .75 acre and cost just under $45,000. Sounds like theft to someone who grew up in a metropolitan area like I did – BUT – given the remote area I now live in and the very low wages around here, the percentage of my income that goes to housing is still around 25% of my take-home pay.
Just to clarify- we live in the midwest and enjoy a very low cost of living. Our current home cost about $155k and the “dream home” was around $300K.
I have no idea what Tyler makes but it’s pretty likely that it’s a lot more than me! We make a modest living and have a combined annual gross income of around 100K. Our income fluctuates slightly.
Isn’t that twice the median annual household income for the nation, much less the low cost-of-living midwest? That’s not “very modest” in any framework I know of.
I’m not sure, but you are probably right. My point is that we are middle class. Most people we know personally make a lot more than us. Our income is probably about average for my area.
“Most people we know personally make a lot more than us.”
Ah, and here we have the source of your bias! $100k household income is at the very, very top of what is considered middle-class (according to wikipedia) – in fact, is the top of the upper middle class. And that is for the entire country, not just the midwest.
I get your point. I also think that I feel more middle class because we live so far below our means. We have not raised our lifestyle much since we got married 7 years ago. At that time, we made a combined income of about 40K.
imelda, the source quoted in wikipedia actually says the American middle class range includes “INDIVIDUALS making between $25,000 and $100,000 a year.” Thus, for a married couple/family, that would be $50,000 to $200,000 per year. In every modern conception of the American middle class that I’ve heard, Holly is right on that her and her husband’s $100,000 combined annual income is solidly middle class.
Oh Holly, I loved your article – but I have a sticking point here.
You are not middle class.
6 figures combined is (like someone already posted) 2x the average income in the US. It’s hard to believe that you arent’ middle class when all you see on TV is the out of this world crazy celebrities that are living like the Hiltons (but would be bankrupt and broke if their reality show were cancelled).
If I lived where all my coworkers lived – I would also feel as if I were average – because a lot of people around me make significantly more – but we chose to live on the not so expensive side of town (which in my town is still very nice and safe) – which means that a good portions of our neighbors do make considerably less than us, but we have similar values around spending money.
Well, you have a point. Being surrounded by a lot of high income earners probably skews my perception.
Great article. I was relieved it ended this way. 🙂
I wish I could make this argument for our current home – and the $535/mo 15-year mortgage is outstanding – but while I love some aspects of our house (namely the land, and the $4500 roof we just put on), the fact is that we outgrew it the moment I moved in. 1000 sqft is just not enough for us, especially when one room is dedicated to my husband’s music studio. Our kitchen is similarly minimally upgradeable, and the value of those upgrades may be lost in a home of our size that has never sold for more than $80k. But since I’m still in school, which costs us an additional ~15k/yr, and not working, we’re sucking it up for now. But we will move. Oh yes. We will move.
You should have bought the house.
And you still should buy the house.
It is, afterall, one of your dreams, so while you think you may be giving some up, you are fulfilling other ones.
And the price will likely never be lower. The rates will likely never be lower.
That 3.5% loan is an inflation hedge. Therefore the 30 yr loan is actually the smart thing you and everyone else should be choosing.
you have the opportunity to enjoy your dream living for the next 18 years. At that time, this dream home will likely have appreciated far more that your existing house, and they payments will still be relatively low factoring in inflation.
At that time you could sell, take the proceeds and buy another house (though I wouldn’t). You would still be debt free at the same time, but have lived your dream in the interim.
Sacrifice for the sake of itself is not the goal. Maximizing your life is the goal.
So maximize it.
If she crunched the numbers and this is the way she can afford to help her kids pay for college, I think it makes sense.
Do you think that will still be the case when the baby boomers start downsizing? (I’m curious to hear your thoughts). I keep hearing that when the baby boomers downsize, there will be a lot of higher end homes on the market and a higher demand for smaller homes.
Obviously it’s not going to happen all at once, but boomers will be competing for smaller homes with younger generations who can’t afford the big homes due to student debt, unemployment, lower starting salaries, etc. Some experts warn that people who buy bigger homes now may not see the value of those homes increase the way they hope.
Thoughts?
If this kind of thing starts happening in a community, I would imagine that the community would start changing zoning laws so that the larger houses could be changed into two or three smaller apartments instead. That is pretty much what happened to many of the massive Victorian homes built at the last turn of the century.
That’s something that might work. Though I’d hate to see what sort of sound-proofing would be required to make some of today’s houses into livable apartments/duplexes. At least the brownstones were solidly built.
A lot of baby boomers that I’ve talked to have mentioned that they’d really prefer to stay put where they are. For some it’s because they don’t want to sell off all of their stuff to fit into a smaller space. For others, they don’t want to leave the area where they are now. It’ll be interesting to see how many actually decide to move versus modify their old home to accommodate what they need.
You guys have brought up some good points though. I’ll have to keep that in mind when I start house hunting in a year or two.
I agree about the 3.5% – I would advise people to take out as much money at that rate as they can.
But I disagree about the rest. It doesn’t matter what happens with inflation, the stock market, or other parts of the economy/financial markets. A house is an expense. A house that is too big/fancy/whatever will be drag on your finances.
What a charming post. I also had a small inconvenient kitchen, but with the free help of the designer at the cabinet store, we came up with a much better layout and lots more storage within the same footprint. Places like Home Depot have that service too. I have been in my “starter home” for 36 years and it has worked well for us.
I think Holly made the right choice. Sure a bigger house would be nice. But at what cost? If working down your debt is more important and a higher priority, than it was smart to walk away.
We also have a “garden tub”. And yes, its just a big bathtub similar to a hot tub but without the jets.
Sounds like you made a great choice, but might I encourage you to take an alternative perspective on how you use your space, if your space isn’t meeting your needs. I live in a 210 square foot apartment in New York City, and it often amazes people that I can have the things I have in such a small space. There is something to be said about creativity, and the US housing culture is notorious for going big on space, not on creative uses of that space. I’m not saying you aren’t using your space effectively, but I would urge you to consider things from a different angle.
Maybe you can’t have a garden tub, but what about a tub in the garden? Add some trellises and vines and you could have an outdoor oasis fit for royalty.
And if you don’t like the way your kitchen is laid out, that you feel your dishes are all in the wrong place, perhaps bringing in a kitchen/interior designer could really take your kitchen from the wrong layout to the perfect layout.
So often our culture says that if all of our stuff doesn’t fit in our space the way it currently is, then we must need more space. Why rearrange when you can upgrade? I’d argue we often just need a new way of looking at it, especially if buying a new house isn’t really in the cards.
For ideas, I’d recommend checking out apartmenttherapy.com for space saving ideas and design do-it-yourself type projects that work well to maximize space. They have a lot of great design ideas that work at every scale from country farm house to tiny urban apartment. And for professional help with your kitchen or backyard, check out http://www.asid.org/ the american society of interior designers, or even HGTV.com who knows what you’ll find on there, maybe you can get a TV show designers to help you out!
@ Holly
I read and gave a thumbs up to this post earlier, and after some other random activity I have a few ideas on your home, maybe they can work or maybe they won’t:
1) The backyard has other adjacent backyards.
Would it be possible to fence all or part of your yard? If not the traditional picket fence or a brick wall (I love those), maybe living plants like bamboo or something like that? I randomly googled this:
http://www.ehow.com/list_7684653_inexpensive-fence-alternatives.html
2) The tub. If you can gain some privacy in your yard, then next you could install an outdoor hot tub. Those are great by the way. OR build a separate closed structure, like a sauna, so you don’t have to fence the whole yard. Ridiculous photo example:
http://www.finnleo.com/upl/images/149297.png
3) The kitchen. I read that you are trying to put pots in drawers, but you can hang pots from the ceilings or walls, e.g.:
http://www.crateandbarrel.com/kitchen-and-food/pot-racks-hooks/1
Obvious, but I thought I’d mention it anyway.
Then there’s the whole paring down process, seeing how many tools you really need etc. Another random search:
http://thestonesoup.com/blog/2010/04/how-to-setup-a-minimalist-kitchen-part-1-things-to-avoid/
I don’t totally agree with that post and it’s not applicable to a whole family but it makes you think.
Anyway, sounds to me like after getting rid of unnecessary equipment you could probably afford: a) a designer to come up with a new kitchen layout, b) custom cabinets. Really, buying a new house to get new drawers is like trying to kill flies with a cannon. New drawers = easier.
—
And again, congrats on your responsible choice! I hope you can find creative ways to enjoy the things you want while keeping with your financial targets.
These are great suggestions!
I don’t know why but I have never considered getting an outdoor hot tub before. That is an excellent idea. I don’t know how much they are but will definitely be doing some research. The thought of the extra water use and electricity cost was initially a turn-off but I am warming up to the idea!
My kitchen-
I don’t know. Someone below mentioned that a professional remodeler could see possibilities that I haven’t considered. That may be the way to go.
Thanks for the great suggestions~!
Glad you like. Let me just briefly add 2 things:
1) A block of wax like the kind they use in canning (you can buy in any supermarket) will keep your non-rolling drawers opening & closing smoothly (same with old windows, etc.) before you even buy a pot rack. (My mom’s trick– she uses candles on sliding windows.) $2 per block or something?
2) If you are concerned about utilities, maintenance etc., on a jacuzzi, you could go low-tech with the tub. Google “outdoor japanese tub” for examples. I think you pay once, no moving parts. Eg look at this beauty:
http://bathtub2u.com/wp-content/uploads/2012/03/Outdoor-Japanese-Soaking-Tub.jpg
notice the faucets run out of the wall of the house (cheaper, prevents freezes) and there’s a glass enclosure– cool!
the more traditional wooden tub:
http://www.snuut.com/images/2011/08/Traditional-Wooden-Japanese-Tubs-540×386.jpg
Though if you want jets, ‘Merica makes a version with jets!:
http://www.luxuryhousingtrends.com/archive/2008/11/ofuro-outdoor-s/
Alright! Have fun. But start with the wax! 😀
If you’re looking at a hot tub, check craigslist. In our area, they show up there pretty regularly for about 20% of retail. You’ll want to pay hot tub movers to move it for you, but otherwise, it can be a great option.
I’m replying here since my post is on kitchen efficiency. I have a small apartment kitchen that isn’t very well laid out (it’s long and skinny).
My primary work space is next to the stove, and is a small rolling cart from Ikea. I added a magnetic strip on the wall at eye level, and below it hung a metal rod, both from IKEA. I use hooks to hang cooking utensils from the rod. On the magnetic strip I have a few knives and use metal knobs to pin up whatever recipe I’m currently using – the instructions are at eye level and not taking up counter space.
Not sure that will help, but it’s another one of those life-changing little things – it’s seriously made my kitchen 300% better.
I absolutely second this with regard to the backyard. We have a similar set-up, it sounds like – small backyard in a newish subdivision open to the neighbors, and no fences allowed by HOA covenant (dratted things). In the last few years, I’ve planted tall ornamental grasses in one corner, redtwig dogwoods in another (it’s boggy and not much will grow there, another challenge), a shade tree in the center of the yard, etc. It’s made a big difference in making our backyard feel a lot more like a real, functional backyard rather than a useless desert that insults you with its need for mowing.
I was going to recommend Apartment Therapy for the commenter above who said she and her partner are too cramped in their 1,000 square foot home. There are a lot of great ideas at that site for living in small spaces.
This one hits home for me, big time. I’ve often wondered why retirement advice ALWAYS seems to assume that you are living in the house and town you want to stay in (just pay off the mortgage and you’ll be gold!) Well, sure. But how common is that?
During the past 7 years (of the 12 during which we’ve had decent income) we have become steadily more frugal, engaged in lifestyle DE-flation, and struggled to catch up on retirement savings while supporting my mother at the same time. We live in one of the cheapest cities in the country, in Texas (no income tax). Combined mortgage on TWO houses is under 600$, and we are on track to have both paid off in 12 years. Problem is, we are miserable. We are NOT ‘city’ people; we’re wilderness types…just not cut out for having neighbors and their trash, noise, and esp their damn barking dogs. We fantasize about country property and we could technically afford it, but it would put us behind our retirement goals, prevent us the escape of travel, AND be harder to sell if we ever get an opportunity for a job-based relocation. Plus, “country” property here is appallingly, soul crushingly ugly, so we’d be looking at years of landscaping to make it into the veggie/flower/homestead that we want. So we do nothing, and the years tick by.
So far, we’ve made the same decisions as Holly did: the practical, frugal ones. I’m worried, though, that on my deathbed, I’m going to regret a lot of these ‘smart’ decisions.
Frugal lifestyle now = pay a landscaper later (in cash).
I think you’re making the right decision.
We keep going over and over the decision, and we keep sticking with our default, but we think it is the correct one only because we keep holding on to a sliver of hope that we’ll have an opportunity to relocate before retirement. But it’s a sad, defensive crouch we’re in, IMO. My husband is 50 and I’m 41. The outdoors/nature is pretty much the focus of our identities, and we’ve spent 12 years of our adult lives in the antithesis of nature/beauty/outdoor opportunities.
If it were just us, or if we were younger and didn’t need to plow so much into retirement, we’d likely move and live poor as hell and be ok with it. But we have to be able to support a third person (plus intermittent support for OTHER family members), so rather than having more options, it feels like we have fewer and fewer as the years go by. I realize this is true of all people to some extent, but man, being an adult really sucks a lot of the time.
Is your bigger problem the state/area that you live in? I realize that it is incredibly cheap where you live and it is allowing you to achieve your longer-term financial goals which is great. But if you already know that you are living in the wrong place and are basically biding time until you can move to somewhere you want to be, I think it would be worth looking into whether you can have your cake and eat it to now.
That would mean having to find new jobs in a new location which I know is not easy, but since it sounds like you are so unhappy, you might as well at least consider the possibility. If you moved, for example, to a nicer area you might be able to enjoy what makes you happy now while still working towards owning a home outright.
As an example, we live in an urban/suburban area now that is surrounded by fabulous nature possibilities: ocean, bay, mountains, forest, tons of hiking and camping, all within 30-60 minutes from my front door. That goes a long way to scratching the itch and keeping me sane though I know that my long-term retirement goal is to have a property overlooking the ocean where I can garden and watch the waves all day. Perhaps you could seek out a similar compromise. Your mental happiness really is important; it isn’t all about numbers on a spreadsheet.
I would have moved.
A creek? Five acres? Probably better school district? Room for loads of teens to come to YOUR house to hang out. And if the end of the world comes- you could farm the five acres (my husband’s input). We had just that- but forest not rolling hills. We chose to bite the bullet and put our kids in a place they could dream and grow with few
on lookers. When they bashed the mailbox- it was OUR mailbox. The cross country team lived at our house during the season- at the pool table in the playroom- while I served up healthy food from my cook’s kitchen.
When the kids moved away- so did we. We never regretted our decision and our house sold quickly. You may choose to spend the rest of your lives in that house.
3.25% is insanely low rates (my daughter just closed on a house). It is $500 less per month for your priced house (the same as hers) then we paid for our house 20 years ago (6%). Yes, you will still owe “the man” until you are 43. We owed until 50. Owing on a house actually increases financial aide for college for your kids.
Can you still travel? We did on two very middle income salaries. It is all about the budget. We ended up doing loads of the maintenance ourselves…which was fine since we loved our house.
Counter to what everyone says— a rich life is not only about the money in the bank. I am VERY frugal…but this sounds like a decision I would reconsider.
While it sounds like you had a wonderful time in your home, I find it highly unlikely that Holly would be able to replicate your experiences. We don’t know that she wants a pool room to host the cross-country running team and other people’s kids living in her house all the time.
All she really wants is a big bath tub, a more private backyard, and a kitchen. And on first impression, adding 10+ years of debt for those 3 things seems horribly expensive– she could get those 3 things for lots cheaper.
There are so many things going into making a decision that only the person who makes it really knows all the elements, but at least Holly was clear on her priorities and her price tag.
Anyway, I was really glad to see a post about someone being an adult about their choices and learn to live within limits, whatever those limits are– and they can have anything they want just not everything, and they chose, and I really wish her the best and no regrets.
Ha,ha!
The thought of a whole cross country team staying at my house is truly terrifying but I get the point that Janette is trying to make. There are certain benefits of having a larger home and more space for my kids and their friends would be one of them.
Thanks, El Nerdo, for your well wishes!
I think a very important part left out of the story is the one on your blog. There is a chance that you will no longer be able to work in a few years. That would cut your income down a great deal- making the extra $300. a month payments and the longer time more important to the story.
Knowing that your back is the other issue makes the garden tub more important as well.
I also did not understand that your children are very young- making my comments about sports teams at my house a bit over the top for you. I never would have imagined that it would be important to have “the kids” at my house until I figured out that they could be safe and happy hanging out at my house—or try to find someplace else….
All in all, I think staying in your present home makes more sense. Make it into the place you want it to be. 2300 sq feet is nothing to sneeze at. Just do not expect to get back the money you sink in if your house is the same as most of the other houses in the neighborhood. See the improvements as cost of living in a house.
Thanks Janette!
Yeah, my kids are 3 and 1 so they don’t really have friends over yet. I honestly do know what you mean though about the benefits of having a large space for your kid’s friends. My boss finished his basement and had an inground pool built in so his teenagers would be more likely to bring their friends over and hang out at home. That way he can keep a better eye on them. Really, it makes sense.
I really like this comment, because the desires resonates with me, but I have a perpective Holly can appreciate. When I was growing up – my house was the party house. All my friends were always stopping by, literaly, most Sunday’s during the winter my parents had anywhere from 3-10 extra kids for dinner. Spaghetti anyone? The thing is – they didn’t have the biggest house or the nicest stuff. What they had was the willingness to share their home with their kids friends. they renovated their garage so they would have their own space and turned the house over to us, complete with a pinball machine in the dining room and and OLD, WARPED ping pong table in the basement (total investment – under $200). I have always know that I wanted to have ‘that house’ but it never occured to me that it needed to be big or have lots of space, only that it needed to be convenient – cause most of us kids were walking and bussing it.
I think you did right. My home is far from perfect and has very few of the dream features I wanted at the start. However, my family are comfortable here and the area is good. I would only move now if it was to downsize. Dreams have a time span and, when not achieved, you don’t miss what you never had!
My issues with a mortgage is, Debt = fixed expenses. Working in Aerospace, Defense and Construction my entire professional life, I strive to keep my fixed expenses down. That way when the in inevitable layoff comes, I am not in a terrible spot.
It is easier to trim your lifestyle when you don’t have long term contracts or monthly payments.
That is why we avoid debt.
We moved from a little crowded house to a big house in a better neighborhood when my kids were 12, 11 and 9 – just at / before puberty when privacy and space became more important. We sold it 9 years later when they were 21, 20 and 18. (This was because we got divorced, otherwise I would probably have stayed at least until they were out of college.) I have so many wonderful memories of our house being full of kids, and having enough space that they could all have friends over and still have their own space to congregate.
I don’t at all think you made the wrong decision, but I do think you could have gone the other way and not thought it was a mistake in the end.
I am now in a tiny 3 bedroom 1 bath with my fiance and between us we have 5 kids. We are not moving – but there is a cost. We have to double up kids in rooms and Chris’ teenager is not always delighted to share a room with my son home from college for the summer.
We do make it work, but there is a cost. One is that my daughter is living with her father instead of me (she just graduated from college). I don’t have any room for her, unless she shares with her brother, which would be just weird.
I know I am going a bit off-topic, but there are real consequences of not having enough space. In this case, it sounds like you have enough space, you just don’t love your house.
It can be so difficult to tell ourselves “no” to new, shiny things and be content with what we have. So often, that new and exciting object is not nearly as wonderful after the purchase. You were wise to say no to yourself now. I’ll bet a better opportunity comes along for you and your family — one that will fit your budget more comfortably.
BTW, my home has a garden tub, and I rarely use it. It’s so long that whenever I try to recline and soak, I slide right under the water. Not very relaxing! Plus, our water heater is not larger enough to produce a full tub of hot water. 🙂
I agree that we need to learn how to just be happy with what we have sometimes. It’s so easy to focus on what we don’t have and forget that we’re already living in a 2,300 square foot home that has nothing wrong with it except the things we’ve decided are wrong with it…at one time we were happy with it. And now that we’re coveting something else, even the most insignificant things become major annoyances.
It’s nice to have dreams and goals for the future, but when those dreams and goals make you unsatisfied with your life today, maybe it’s time to reflect on just how good we really have it instead of giving so much attention to not having a garden tub (whatever that is.)
Thanks for the laugh about your tub. I have always wanted some type of soaking tub, but the reality is I probably wouldn’t use it much either…especially if I might nearly drown.
Many years ago our home was struck by lightning and there was an attic fire. We had to live in an apt until the repairs were completed…about 3 months. The apt had a garden tub — something I always thought would be great. I used it twice in those 3 months…including the night before we moved out, knowing it was the last time I would have access to it. That convinced me that it wasn’t worth worrying about.
Aren’t there larger/deeper regular sized tubs that can fit in an existing tub space? Seems like a good solution if there’s a real need/desire.
Yes! I have one of those. It works out really well. I don’t have jets, but I use it to soak sore muscles. I’m tall, and I can get totally covered with water up to my chin.
I think the point that is missed by some of the differing opinions is that the writer keeps more choices open for her future. Doesn’t mean they can’t change their mind and buy some “dream home” down the road (when it might make more sense or can pay cash or with a small mortgage). Likewise, *no one* wishes on their deathbed that they had lived their life in a bigger/nicer home. & I think Holly *gets* it.
I can relate to this post on many levels. We were blessed to learn this lesson in our 20s -that is when we stopped looking at bigger houses. For us, simplicity is much more important. OF course, my spouse battled a brain tumor a couple of years ago, so I kind of cringe when people push spending more money in the name of “living life.” We will have a mortgage into our 50s because we have chosen to live life to our fullest, work less, and spend more time with our children. We made these decisions pre-brain tumor. The idea of keeping a mortgage into our 50s “because we weren’t content and needed a bigger house” makes me cringe a bit. We almost made that decision, to buy a bigger home, but after my spouse’s health scare we have been more content than ever with our choices to forget about “stuff” and “bigger homes.” Just another point of view, I guess.
Likewise, everyone is different, and if you still have a burning passion for that house in 10 years, is one thing. I think it’s easy to confuse “fleeting wants” and “burning passions” when you don’t take time to reflect and save up. I have never regretted taking our time to save up for a passion. I’ve changed my mind and decided that some things were not worth all the time and effort, many times!
My sister, a lifelong PNW resident, lives in Florence, OR, and has a garden tub. She requested the garden tub when the house was being constructed. So I don’t think it’s regional, just a current term for, as you say, a big bathtub.
Where does the “garden” part come in though? I though previously this would be some sort of outdoor hot tub. Is it one of those random marketing terms?
Well, dang, you made me go and google the origin of garden tub. This is what I found:
“Garden Bath Tubs Historically
The garden bath tub originated in Europe in the 1700s. The French elites put zinc tubs outside in their gardens and drained used water into the gardens. The wealthy in England installed the tubs inside the home next to picture windows which overlooked lavish garden rooms or outdoor gardens.
Modern Garden Tubs
Garden tubs in their true sense today are tubs without showers, similar to large, deep soak tubs but are installed next to picture windows. Hot tubs and Jacuzzis built outside the home are the most traditionally accurate version of the garden tub despite modern water jet systems.”
Ah, awesome, thanks! I thought it was just a random marketing term, which made it irksome to use. Now we all now the truth– thanks!
This is relevant to Holly’s article:
Seems to me she can still have a proper garden tub, much like Ryan C suggested in his post!
Having an outdoor bathtub that drains into the garden sounds like a very good “green” idea. I have always wanted an outdoor shower, now I want an outdoor bathtub.
Oh man, when we bought our house the realtor convinced us that a house of our size (which isn’t mostrously big or fancy – it’s 2500sq ft – 3 bedroom 2 story) really needed the ‘5 piece bath’. Which was defined as the toilet, 2 sinks, a shower and a ‘garden tub’. To be honest – as much as I cringe at the marketing speak (and to read it in the other comment it just screams ‘consumer’), I LOVE my 5 piece bath. I love that I don’t have to share the sink with my husband, I love that when I want to take a nice bath I have a great big clean tub that I don’t have to pull the shower curtain out of, that has a nice wide rim with a big picture on one side and a picture window on the other. It doesn’t hurt that my garden tub is jetted either. I love the bathroom in all it’s roomy and airiness (it has a vaulted ceiling).
Is that really so terrible?
This is exactly what we did, but instead of seeing the light, we bought the dream house. And even though we sold it a year ago, after sticking it out for over 7 years, what a toll it took on us, financially and about every other way you can think of. We went from paying in full any charges on our one credit card, to having a $10,000+ balance that we are working our hardest on paying off. Good for you…you’re light-years ahead of us!
I’m 32, working Dave Ramsey’s program, amd have figured that by following the baby steps we’ll be able to purchase our first house when we are 36. To be debt free at 37 really makes a difference to my number crunching!
If I estimate my future (currently unconceived) children won’t move out of the “dream house” until I’m mid-50s, will I then want to downgrade to something smaller?
Maybe I don’t need to be looking at 4 bedrooms, 3 baths, finished basements.
This was a great article. Showing adults being adults and giving up what they want in order to live like no one else later.
Congratulations on making responsible, wise, grown-up decisions! I like this article a lot.
I am constantly amazed by how over-privileged almost everyone in America is. Instead of focusing on the immense amount that we all have (even poor Americans have things that would blow the minds of Americans several decades ago and of much of the developing world), we whine about the luxury items we don’t have. And we think we need more space when we have enough space to house another whole family if needed. And we complain about needing more storage space so we can store our piles of crap that we’ll never use. It’s a sad cycle.
Thank you. (And ditto.)
It is kind of interesting that my sister and I grew up in a 3 bedroom, 1 1/2 bath home that was 1100 sq. ft. and thought it was adequate space. We didn’t have enough clothes to justify a walk-in closet (and still don’t), but that seems to be a must-have now. We shared a bedroom that people would describe as “small” until my grandmother, who had the third bedroom, died. I do have to say that having two full bathrooms does make things a lot easier, even with only two of us.
Wow! Good on you folks! for making the financial decision.
Keep it up guys, pay off the home by the time you are in your mid thirties.
Fantastic financial planning/decisionmaking
Regards,
Thanks for writing this. Our home, while not our dream home, is paid off. Just when I start to feel dissatisfied with it, I remember that I too can either have a dream home or dream life. Thanks for this reminder today!!
A few months ago, we started thinking the other way round. We’re currently living in a rented row house and we ended up realizing that we really want a house out in the countryside with lots of acres around it so that we could have friends living with us and organize gatherings for up to 25 people (which we do at rented locations a few times a year right now).
So now we’re saving up for this and BOY, I really am motivated to save up for the first time in my life. I want this SO BADLY, I’ve already started to bring in extra income.
Holly, can I give you an Internet hug? This was an awesome post!
My husband and I are in that spot right now – our home is (relatively) small for our family of four, but buying a bigger home would mean starting all over with our debt reduction. Right now, we can be debt-free by 40. But if we buy a new house, even with a 15-year mortgage, we’ll be well into our 40s – and will miss out on saving as much for retirement, travel, college, etc.
(Also, we can barely keep up with the maintenance of our home – moving to a house double in size would require a LOT more work, with a bigger lawn, more bathrooms to clean, more woodwork to dust, etc. No thanks.)
Little houses FTW!
Are you referring to your house as being small or Holly’s house? I don’t know the size of your house, but if you are talking about anything close to Holly’s 2,300 sq. ft, it reveals how off kilter our views of “small” have become.
I don’t think anyone should ever describe a 2,300 square feet house as small.
Some families might think they have outgrown a house that size, but it is not a little house.
I got the impression Megan was referring to her own house.
Mine’s just under 900 sf.
I guess I should have phrased it as “smaller houses ftw” – as Holly was planning to a bigger home.
Thanks for the clarification, Megan. I would certainly consider a 900 sq. ft. home small. 🙂
We are a family of four and are currently expanding our house from 1,200 to 1,500 sq. ft. Sometimes I wonder what I will do with “all” that extra space. I find my biggest anxiety is the thought of having to clean two bathrooms rather than one.
I love this reader’s story! Although my husband and I would love to take advantage of the lower rates, and “move up” to a larger house in a nicer area, we succeeded in paying our house off (early)last year and love the ability we have to save more money now than ever. We have a solid emergency savings fund, and a great down-payment for another home, should we find one that would allow us to pay it off in 15 years. Plus, with the first home paid off, we can lease it out for a third income stream, great for paying down the second home early. Some of the trade offs the reader could make include more travel, and making sure to book a hotel with a “garden” or oversize tub. Or better yet, invest in an outdoor hot tub/spa; I have an acquaintance who purchased one second hand for about $1,000 and even negotiated having the seller both deliver and install it! Not only could she bask in a truly “oversize” tub, she could gaze up at the stars when using it at night. Great appliances with all the bells and whistles can be found in the scratch and dent corner or aisle of many home improvement stores likes Lowe’s and Home Depot. With no new, long-term mortgage, all of these options are feasible, and oh-so-affordable. Great story!
Whatever size your house is….look ahead. I renovated my 2300 sq ft house and made the existing garage a master bedroom. Now, as I age or have medical problems, my house is all on one floor.
I also made energy-efficient upgrades which have helped tremendously. If you own a home, it is certain that you will send money on it at some time. My electric bills are one quarter what other friends who have not made upgrades pay.
When the children leave home, the house can be re-floor planned to accommodate a garden tub (seniors don’t really want them), larger closets, better planned kitchens, etc. The point is..if you stay in your home, ask the question “Is my home handicap accessible”?
my parent’s home has 2 sets of stairs but they installed an elevator when my great aunt and uncle moved in. this made it accessible for them and for my parents in the future as well. Now my mom uses it to bring groceries up. It is a smart use of the space they already own.
Remodelers can see things you can’t see yourself. Definitely consider looking into it and making friends with your neighbors 🙂
It gets down to why do you need to move. If you need more space or are you just indulging in a fantasy. There probably is something in between that you could still have a 15 year mortgage.
Nice story. We live in a 2000sf home that we love. Our home was built in the late 70s and we’ve gone thru rounds of replacements in recent years and we kept thinking how much more we’d be spending (roof, hvac, windows) if it were a bigger home. With our kids finishing high school/college, I can’t imagine having even more space. Lots of our kids friends have bigger homes, but the extra costs (utilities, taxes, upkeep) has to be factored in.
Yay you for not succumbing to the emotions and getting the “dream house”. Sounds like you would have ended up regretting it a lot. (I’m having a similar issue now where my DH wants to buy a property acreage that we could afford but only just.)
But, sometimes you shouldn’t JUST be rational. Sure, you don’t need the uber expensive dream house. But, every single day you’re living with a kitchen you don’t like, and a house that isn’t quite what you wanted. Surely there is a compromise somewhere that would allow you to get a house with the things that are important to you, without blowing the budget? Because you’ll be stuck with this house for X amount of years, that’s an awful lot of time to spend not liking bits of it.
There has to be a compromise that will let you have both the dream house (or the bits that really matter) AND the life.
Best article I have read in some time.
I have a big property, and I would love to get rid of it. I think you did yourself a favor staying away from 5 acres. The upkeep and maintenance on our property is far more than I ever dreamed, and it is the last thing you really want to spend time on when you are in the process of raising kids. When we bought this property, I asked the previous owner if she was moving to another large property. She looked at me and said, “H___ No.” Now I understand what she was talking about.
I grew up on two acres in the woods in Connecticut. Beautiful house, beautiful grounds, pool, etc. But you know what? My parents got SO sick of the time and money required to maintain that property – think of all the trees, the snow removal, and how even basic landscaping is really expensive with that much acreage – and now they are beyond delighted to have downsized to a condo.
I think that having land can sound much nicer than it actually is when you are on the hook day in and day out to take care of it…
I know just how your parents felt. The problem is my kids are now very attached to this house/property, and it is difficult to sell it since they have so many memories. But hopefully as they move away (the oldest is 20) it will become less painful for them. Was it difficult for you when your parents sold their home?
Excellent post. My husband and I found ourselves in the same situation back in 2007 — before the housing crash. When we looked at the amount of debt we would take on versus the amount we still owed on our current house, it was a no brainer. Not to mention the increase in property taxes, utilities and maintanence. We’re still in our original house, all 1500 sq ft of it.
Yes, it gets a bit crowded as the kids grow, but they’ll start leaving for college in about 10 years. Then we’ll find ourselves with too much space again.
And best of all, we’ll have the title on our house instead of another 10 years on a mortgage.
Give yourself a pat on the back for being so smart, so young.
What a great reader story, loved iit!
We are in a similar position, but we have less left on our current mortgage ($25,000/4.5 years at max). So, we went the have-a-home-built route.
We are increasing our current housing costs from $750 a month to $2750 a month with both mortgages and all property taxes, but we will also have $1200 of rental income coming in on our current house each month (we already have a renter lined up for when our new home is completed in September) as well as $600 a month for renting out a spare bedroom (which we do now…same friends are moving with us).
But your post really makes me think that we may have had a ton of fun with the extra money every month…maybe. Since most of our fun with friends is in our home via potlucks, board games, and movie nights, we just decided to splurge on the “dream house”. I hope we never regret it – fingers crossed.
I hope you very much enjoy your financial freedom and are able to add in some of your faves somehow in your current home! Thanks for the post!
And JD, what do they call garden tubs elsewhere? Here we call the huge, spa-like tubs without water jets “garden tubs” and the ones with water jets are called “Jacuzzi or Whirlpool tubs” even if that’s not their brand, lol.
Love this story and hitting for me at a timely point. Have an opportunity to purchase a house on a really good deal but it is without the acreage that I have always wanted to have attached to such a house. Your point about giving up dreams to have a dream home really hits right.
I love this post, it can remind me when I and my husband decide to buy 2nd home in the future. My rule of buying any homes: you should be able to afford double payment of 30 yrs mortgage loan. if your normal payment is $1,200 monthly, then if you can’t pay $2,400 means you can not afford it yet…gotta wait.
Has this rule, it helps my life style will not change or not comfortable when i have bigger home payment !
This is a great post, but I admittedly struggle with what is the best decision in this situation, as a house is more than a home, it’s also an investment. I think we are near the bottom of this bad real estate downturn, and assuming you can afford the payments, it’s possible that the bigger house could show you a nicer return in the long run. It’s definitely a gamble, but I was just curious if you factored the investment side into your decision? My wife and I are in a similar situation and have considered upgrading, but like you, we worry about the peace of mind and opportunity cost, but I’d hate to look back in 10 years and think that peace of mind caused us to miss out on some nice appreciation (not to mention missing out on the years of being in a house we would really enjoy).
Be careful with that whole “a house is also an investment” concept. In certain cases (rental properties that bring in income), yes, property is an investment. But in most cases – will the home’s appreciation cover the mortgage interest you pay over 15 or 30 years, as well as necessary maintenance, some improvements, etc? Honestly, if you take a really hard look at the numbers, for most of us it probably won’t.
This is a great post. I enjoy how you tell the story of excitement and resolve to pay the additional money to have the “dream home” and end with the very real conclusion that you’ve essentially doubled your debt in order to “live the dream”. That being said, I have an alternative point of view:
Hire an architect to design the upgrades you want for your current home. You used a word that I try to avoid at all costs several times in the first part of your post – CAN’T. You can’t make the kitchen larger, you can’t upgrade the backyard to be more usable, you can’t add a garden tub, etc. As a designer, I can tell you that nothing is impossible with the right vision and the right set of tools. It’s what I do – take your dreams and make them a reality and there are many like me that specialize in taking spaces that “can’t” be made better and WE MAKE THEM BETTER.
So, the moral of my little tale is when you think you can’t change something, talk to someone who knows you can and get a second opinion.
Any advice on how to find designers?
Dehlia,
Well, obviously, you could always call me. 😉
Other than that, depending on where you live, you could contact your local chapter of The American Institute of Architects (AIA) or peruse sites like Elance or Odesk (freelancer websites). I would be careful with the freelancer websites though. 9 times out of 10 you will get “designers” in far off foreign countries that may have no idea how to design to standards in this country.
Let me know if I can help.
Cheers.
Jeremiah
r | one studio architecture
http://www.ronestudio.wordpress.com
I would like to note that I just paid water and electricity on our 3000 sq ft house: $343. Along with our huge yard comes yardwork. We hardly ever use the jacuzzi tub, preferring the shower or the smaller bathtub. If we had to do it again, we would go with a smaller house.
Thank you so much for this article! It’s been a while since I’ve read something on GRS I could really appreciate and related to, and this is the kind of perspective that keeps me coming back! I am so impressed with your long term thinking and outside-the-box concept of wealth. I’m very impressed with your family’s decisions and hope that one day I will be able to mimic them! All the best to your future!
Good choice! 🙂 JD, I rented an apartment in Hillsboro that had a “garden tub” in the master bedroom, but that’s the only reason I know the phrase.
Great post with a practical perspective about how life is full of tradeoffs. I live in a small apartment and don’t even have a TV let alone iPhones and such. However, I value travel, and that’s where I spend my money. I’m not willing to stay in hostels or even budget hotels, and domestic travel no longer appeals to me. So I go to 5-star hotels and international destinations (that I shop around extensively for good deals on). I’m not rich, I just choose to spend my money on things I value more (travel) and forgo things I value less (latest electronics, etc.). For some it is the reverse — they like their toys and have plenty of them, but they don’t take dream vacations.
Neither way is better than the other. Just a matter of personal preference. In another time and place, maybe you would’ve valued the nicer home over a completely debt-free life, and that would’ve been understandable too.
Thanks for this post! I haven’t bought a house, but I want it to be affordable. I don’t want to be in debt forever. At the end of the day, I just want a nice bed, big closet, spacious kitchen, and nice couch. 🙂
Perfect timing of this post. I was in a similar situation but with a car. I got a great paid off car. It is 2004 Civic.
I am not really into cars. No sports, luxury, electronic car ever excite me. Except for Wrangler. I started to imagine what it meant to own a Wrangler. In my mind, Wrangler symbolize freedom, openness, adventure etc. But then I realized that I am buying into Jeep’s marketing.
While Jeep Wrangler might be my dream car, I have, at least, extra car payments worth of money every month that I can use to rent Jeep. I could fly anywhere every month. Do more adventures than it is possible in a Jeep.
So Jeep for now but extra money that let me do more things is nicer.
This is SUCH a great post. It really does boil down to making an informed choice with your personality and plans in mind.
I’m hoping to get on the real estate train in the next 2-12 months, and am currently working on the list of what I want to look for. I am mostly focusing on proximity to friends vs neighborhood offerings vs level of maintenance required, and of course price is a big factor as well. Thank you for the reality check!
Wow, $1700/month for that – where is it? That’s less then I pay a month in rent for my apartment
I love this article. This is similar to how we decided what property to buy (just bought our first home, which is being built as I write!) Our new home is a rowhouse, and we would ultimately have loved a detached with property, however this home is over 2000 sq feet, and a 2 minute walk to my work. And in our eyes, perfect. It may very well be our forever home, and like you we wish to pay it down earlier if possible, and not move! Realizing what we didn’t think was possible, was amazing, and made us so excited for the life to follow!
I missed this post! I loved reading about your decision Holly (mainly because I would have made the same one!)
I made the decision when I first bought my house that I would not buy another home to live in unless I absolutely had to (if I got married and I couldn’t convince him to stay in my house, if I had to move – not likely, if it burned down).
Instead I decided I was going to make my home work for me and make it as delicious as possible. The challenge? It’s only 840 sqft and it’s techincally a one-bedroom, also I know if I’m lucky enough to meet someone and have children I want at least 3. The upside is that I live walking distance to a park and a zoo, close to other activities as well, and have an additional residence on the property (a studio apartment) and plenty of space to expand.
I consider myself a creative person and I would hope that I could find a solution to meet everyone’s needs (even if that includes shared rooms with the kids, and building each of them a small “clubhouse” in the backyard so they can have their privacy when they need it. Moving to a bigger house does not always solve issues.
I love thinking out of the box, especially when it saves money. Want a bigger yard? Maybe your neighbors are willing to sell you some of theirs for the right price (provided zoning laws allow it). Want a bigger kitchen? See if you can use outdoor space to have more options. Of course you don’t want to spend so much that it completely cancels out the benefit of not springing for a larger home, but there is something to be said about having a permanent homebase.
I can’t tell you how many of my friends still pine for their smaller childhood homes to visit when their parents decided they needed more room “for the kids”. Kids are pretty resilient and will accommodate to the family life-styel. The original owners of my one-bedroom house raised a child there and lived their for almost 50 years. And though they had just a little more room, my neighbors on either side raised their children and have been in their home for 30 years.
You don’t need a big house IMO to entertain or host. It’s a waste of space, resources, and finances to get a big house for that reason. My hangouts as a kids were certainly no mansions and we always had a blast. Americans really need to get over this idea that quantity is quality and see the beauty in working with what you have, and the benefits.
Great lesson and good perspective after counting the cost. Thank you for sharing. I believe peace of mind is better then owing our lives to a bank or lending institution.
I have a garden tub that I’ve used maybe twice in the 3+ years I’ve lived in my house. Just like hot tubs, not worth the money.
While I can’t really relate with the specific details (it sounds like housing costs where the author lives must be a fifth to a tenth of the price of where I live) the overall concept really resonates with me. We have been saving and dreaming and planning for the day when we can buy our “forever home”. When I crunch the numbers and look at what it will mean financially, I realize that it will basically be the change in taking a substantial amount of what we are now saving and instead putting that towards housing costs (primarily interest).
Yes, I really want that nice place because I want a house with central heat, insulation, a garage with a garage door opener, a big garden, and so forth. But looking purely at the numbers, if my sole goal in life is to increase my net worth, staying in our crappy rental house now is the best decision we could make since it allows us to sock away so much money. So it really is pitting one dream against another: the quality of life of living in a place you really love vs. the quality of life of having a fat bank account balance.
I don’t have the answer but it is a good thing for us to stew on.
This is a great story and an idea that more people should really ponder. All too often home buyers purchase at their very limit to get as much home as they can. This sets the tone of their life for years to come.
Dream homes are interfering with the pursuit of our dreams. I’ll be sharing this story.