Selling our home was the best financial decision we have ever made

Selling our home was the best financial decision we have ever made

Hello! My name is Wendy Mays, and I'm super happy to share a bit of my story. In the past couple of years, my husband and I have taken several big steps to change our financial future.

From the outside looking in, it appeared we had it all: a perfect family in a beautiful, Pinterest-worthy home in sunny San Diego, California. We'd reached the pinnacle. We were living the American Dream.

Wendy's dream house

The reality, however, was that we were drowning in debt, burned out, and coming to terms with the fact that if things didn't change, we'd carry our debt to our graves. As we explored changes we could make to improve our financial situation, we realized that the biggest and best move we could make was to sell our dream home.

Turns out that selling our home was the best financial decision we have ever made.

Given the long trail of money mistakes my husband have made in the past, some who know us might be skeptical that this choice was the right one. But if you'll indulge me for a few minutes, I hope to dispel the belief that owning your own home is always best.

The American Dream

Home ownership is part of the American Dream. It’s something most folks look forward to accomplishing. It's a rite of passage. It's how we show the world we've “made it”. We're constantly bombarded by messages that home ownership is something successful people “should” do, the same as going to college, getting married, and having children.

Too, most people have a personal attachment to their homes. We understand this. Emotional investment was a big barrier for us too. My family had put our hearts and souls into our home. On every wall, there was something our hands had touched.

We had planned to make the place into our dream home, to stay there indefinitely. It was the first home we owned in San Diego, the first home we owned after adopting our boys. Our house meant something to us. It was sentimental.

But after attending last year's FI Chautauqua in Greece, my husband and I agreed that becoming financially independent was an important goal for both of us. At age 46, we were late to discover the world of early retirement, but we knew if we implemented a few strategies we could change our lives — and the lives of our children.

We began to envision the legacy we could leave our children, the generational wealth we could begin to build.

The Problem with the American Dream

But there was a problem. We were broke. More than broke. We were in debt, including the house, by almost one million dollars. We didn't discriminate when it came to debt. We had it all! We had a mortgage. We had car loans. We had credit-card debt. We had revolving debt. We had tax bills.

When we crunched the numbers, we decided we had two choices to change our money situation.

  1. Cut expenses, then work our way out of the mess we'd created.
  2. Liquidate the only asset we had access to: our home. (All of our other money was in retirement accounts.) We could use the equity to pay off a good portion of our debt.

While we recognized that we absolutely should work to cut costs and build income, the latter option made the most financial sense. Really, it was a no-brainer. But homeownership isn't a decision we make only with our brains; our hearts have to be considered as well.

It took us about six months to arrive at a decision. For weeks, we wavered back and forth about what to do. We didn’t want to sell our house. We loved the home we had created.

Inside Wendy's dream home

Making the Decision

Ultimately, it was our children that allowed us to align our heads with our hearts. We asked ourselves, “Why do we want to achieve financial independence?” It was for our kids, to change our family tree.

We decided that “home” would be wherever we were. Home was a meal at our dinner table. It was game night. Home was watching the Littles ride their scooters in the front sidewalk and family movie night in the drive-way.

Our home wasn't limited by four walls. It wasn't defined by a specific house.

Once we agreed to sell our house, there was another decision to make. We would capture enough money from the sale to not only pay all of off our consumer debt, but have some left over to put into another home.

We weighed the pros and cons of renting versus purchasing another home. We ran the numbers through several different “buy vs. rent” calculators – and in each one, renting came out ahead. In fact, renting could save us anywhere between $800 and $1200 each month

Not only that, but by not buying another primary residence we'd have a significant amount of money left over that could be used for something else, such as investing in out-of-state rental properties.

We decided to rent.

Soon, we found a nice home in our current neighborhood (which was important for us). We were able to rent the place for $1100 less than our previous mortgage.

Crunching the Numbers

For my family, letting go of the attachment to our home allowed us to do some amazing things.

  • We paid off all of our consumer debt. Gone are two car payments and several credit-card balances. This is a savings of about $1600 a month. ($900 in car payments and the rest in credit-card payments.)
  • By renting — and downsizing slightly — we save about $1100 per month in housing payments.
  • Selling our home provided seed money to begin real-estate investing, which will add $1000 of positive cash flow into our budget per month.

That's a grand total of $3700 per month that we put back into our budget. That equates to about $44,000 each year.

Let that sink in for second. Millions of people live on less than this amount comfortably. (What could you do with an extra $44,000 per year?) It's the equivalent of a modest income in the United States.

In fact, freeing up this money allowed me to quit my career as a lawyer and close my practice. For the first time in our lives, my husband and I can live on one income!

Wendy, Curtis, and the kids

After the Sale

Now, several months after selling our home, we can say without hesitation that it was the best thing we've ever done with our money.

This one move has not only decreased our monthly expenses, but it also allowed us to pay off a lot of debt. Plus, we've start investing in real estate, which has also increased our monthly income.

Last year — 365 days ago — we had almost $1,000,000 in debt. Through this one unconventional move, we've gotten rid of almost $700,000 of that debt.

We still have about $350,000 of student loan debt to go – but we have a plan in place to attack that as well.

Once you allow yourself to think outside the box, give yourself permission to make unconventional moves with money, you can do amazing things. Housing is the biggest expense for most Americans. It almost always makes sense to seek ways to decrease that expense. Doing so can bring about all sorts of opportunities.

I encourage you to do consider the possibilities.

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Dan
Dan
8 months ago

Hi Wendy, Thanks for this. As a society, we’ve been pushing home ownership above all else for way too long. And you know what? For those of us who live in HCOL areas, it’s far from simple as you’ve pointed out. Housing where I live is expensive, too, and every time I run the “buy vs rent”, buying never comes out to be a slam dunk. And for me to avoid PMI, that 20% down payment is going to be somewhere near $100,000. The opportunity cost of having that money in the market for 20 years or so (I’m not… Read more »

Wendy
Wendy
8 months ago
Reply to  Dan

Dan,

Thanks for reading. That’s exactly where we are now. We have been very fortunate too to have a landlord that has been very gracious in letting us decorate (we are DIY’ers at heart). It has helped this rental feel like “ours.”

We also can’t imagine putting a down payment into another mortgage for a primary residence right now.

We have seen how that money can go farther for us by investing. It certainly opens up options once you allow yourself to challenge the norms.

Marc Stump
Marc Stump
8 months ago
Reply to  Dan

Wendy, Thanks for your story. I presently have a daughter and son-on-law living with me, along with their two dogs. They believe that any money spent as rent is money wasted. I checked out one of the rent vs. ownership calculators, and it seems to me that in this part of the US, Southeastern Ohio, the difference is too close to even compare, literally within a few dollars. I know the small town I live in, population 5,000, is like many in that the downtown area is depressed, and full of empty shops. The only people I know that have… Read more »

Alex
Alex
8 months ago

If in may I would like to point out that the American dream is not home ownership but exaggeration on everything even beyond sustainability. I believe who realized that and as you said downsized, starting from the house.

Wendy
Wendy
8 months ago
Reply to  Alex

Alex, totally agree and I think I did talk about that in the beginning. Not just homeownership, but kids, college…the white picket fence… at least that’s what I think a lot of middle America strives for.

Thanks for reading!

Eileen
Eileen
8 months ago

Congrats on making a big scary change like that! I do think the story starts before you bought the home though. With $350,000+ in student debt, $900 in monthly car payments, it seems like making the decision to buy the home was one that some people wouldn’t make to begin with. I know High Cost places are very different, but I’ve lived in my home (NC) for over 20 years and I would never change a thing. Knowing where my kids were going to school and being in the same hyper local community is extremely valuable to me. Buying a… Read more »

Wendy
Wendy
8 months ago
Reply to  Eileen

Eileen,

It sounds like you’ve made some really great financial decisions. We didn’t (obviously ?) but I also don’t think we were unlike a good majority of Americans. We were very late to the game and in a very hopeless spot when we turned our finances around. I wanted to share our story to encourage both those who were late to get their finances in order and who carry big debt. It’s never too late to change.

Thank you so much for commenting!

dh
dh
8 months ago

With San Diego also being about the most expensive place you can live in the continental US.

Wendy
Wendy
8 months ago
Reply to  dh

Indeed. We live here because even though it’s a HCOL city (but far from THE most expensive), our quality of life has vastly improved.

Jennifer B
Jennifer B
8 months ago

I know that these stories are short but there seem to be so many details missing. You’ve paid off the car loans, but are you saving for when a new car will be needed to avoid the loans then? You mention paying down debt, but also investing in out of state real estate – did you take on another mortgage to accomplish that? I agree that selling the house sounds like a good choice, I hope you are going to write more about how your real estate investments are working and how you are going to pay down your student… Read more »

FoxTesla
FoxTesla
8 months ago
Reply to  Jennifer B

Agreed, the devil is in the details. Wendy, thanks for your story. If further details are available on your site (in my quick search I didn’t find anything), please link, or please extrapolate here. I’m mostly curious on how you extracted that much post-sale value from your home such that you saved money by renting – were you in year 1/10/20 of a 30 yr mortgage? In the adjustable portion of an ARM? The only way going from owning to renting in the same neighborhood for less than your previous mortgage payment makes sense (based on what I see in… Read more »

CB
CB
8 months ago
Reply to  FoxTesla

Actually, in California it’s super common to be able to rent for significantly less than the cost of a mortgage. It’s b/c everyone is speculating on incredible increases in value (often, they aren’t wrong). It’s a bit messed up, but it’s true.

Wendy
Wendy
8 months ago
Reply to  FoxTesla

FoxTesla,

We purchased our house at just the right time as a foreclosure and we renovated it ourselves. We were also very lucky to have had it appreciate quite a bit in a very short period of time.

We downsized from a 5bed/3.5 bath to a 4/2.5 – smaller but not by much.

And CB is correct that rent being cheaper is not uncommon for many cities in CA.

FoxTesla
FoxTesla
8 months ago
Reply to  Wendy

Appreciate the follow-up. I’m shocked about the CA rental market; based on conversations with co-workers who are on-the-side rental property owners and viewing of listings, I had the following formula for our market:

Monthly Rent = PITI + Upkeep/Management Company Cost + Planned Profit

Direct example – A home in our HOA with same floorplan/sqft for rent is +$300 from our monthly PITI on a 30 yr mortgage.

Wendy
Wendy
8 months ago
Reply to  Jennifer B

Jennifer – there was A LOT I was not able to include. The best place to find more of our story is at houseoffi.com. I’ve told our story on the ChooseFI podcast and a couple of others as well if you want to hear more. We will be putting out another update soon. There is one up on the website as well. To answer your specific questions – We are building a sinking fund should we need another car at some point. But the ones we have should be fine for many more years. We financed about $70k on the… Read more »

Wendy
Wendy
8 months ago
Reply to  Wendy

*a few more properties

Steveark
Steveark
8 months ago

Congrats on making real progress. I’d encourage you to keep on with the extreme war on debt by getting rid of what have to be two extremely expensive cars and buying a couple of road dogs until that student loan is gone. You made great gains but you still have a $300K mountain to climb and I wouldn’t ease off a bit until you do. If you have the toughness to let that house go, the cars should be easy.

Wendy
Wendy
8 months ago
Reply to  Steveark

SteveArk,

Thanks for the comment!

My husband drives a 2006 Dodge Magnum. It’s already a road dog. LOL

The other is a Suburban – we have six kids so having a larger vehicle is a necessity. I do not drive it very much since I stay at home and our kids school is around the corner. So it’s really not something that makes or breaks our budget.

See above where I discussed our student loans.

We will probably be making “unconventional moves” to get ride of those as well.

Wendy
Wendy
8 months ago
Reply to  Wendy

If I wasn’t clear, all our cars are paid for.

stellamarina
stellamarina
8 months ago

Selling the house was the right thing to do…..you had to get rid of that heavy weight of debt. However, I think in the long run it is better to own your own house as you get older and ready to retire. We live in an expensive housing area too……Oahu, Hawaii where the median price for houses is $800,000. We bought our house over 20 years ago and the monthly payments seemed expensive then but we could only rent a one bedroom apartment for that payment now. It is good to know that the house is paid off and even… Read more »

Wendy
Wendy
8 months ago
Reply to  stellamarina

Hi Stellamarina,

We are not opposed to buying another home. But we do not intend to buy one just because. Right now our money is better spent on investments. We also will likely not remain in San Diego when we retire – which if all goes well will be in about 6 years. At that time we may purchase one outright or with a very hefty down payment.

Thanks for taking the time to read our story!

Angelica
Angelica
8 months ago

Very interesting article! In my part of California, it’s still probably makes more sense to buy versus renting a home but just barely. I was fortunate that we purchased our home at the bottom of the market, but know at this point unless we wanted to double our mortgage payment we’re “stuck” where we are at. And I say stuck in the nicest way because, while it’s not perfect, we love where we live. I like the way you are leveraging the extra money.

Wendy
Wendy
8 months ago
Reply to  Angelica

Thank you Angelica. We are in the same boat now in San Diego. We will likely not buy here again unless there is a downturn in the market or we find a REALLY good deal. It just does not make sense.

Megan
Megan
8 months ago

This was a really great, really helpful post. Thanks for sharing!

Selling a house may be an atypical move, but it makes TOTAL sense as you have described it. I’m inspired to re-think!

Wendy
Wendy
8 months ago
Reply to  Megan

Thank you Megan!

wendy
wendy
8 months ago

To me the overwhelming point of all these stories is to just stop and think: – be mindful of where you and your family are now and where you want to go – consider your income & expenses – think about your priorities – be thoughtful and have the courage to make some decisions that may seem brave or outside your norm… So many folks operate on automatic pilot… none of our circumstances are exactly like someone else’s, but we could all probably benefit from some thoughtful consideration of our status quo and what other folks have done. Thanks for… Read more »

Wendy
Wendy
8 months ago
Reply to  wendy

Thank you Wendy! You are absolutely correct.

Fred
Fred
8 months ago

I’ll point out the other side. My 1st Apt was $595 a month. Now (years later) it rents for over $1000 a month. Plus tenants are required by lease to maintain renters insurance. I have owned a home for many years. It’s paid for. My routine monthly expense is $550 for taxes and HOA fees. I have been investing well the money I’ve saved by being an owner instead of a renter. Saving up a GOOD down payment is key. Over the years I have put in less than 3K for appliances, a plumbing repair, and paint. I have equity,… Read more »

Wendy
Wendy
8 months ago
Reply to  Fred

Thank you Fred! For sure, our story (prior to age 46) was a lesson in what NOT to do. Home ownership will be in our future again at some point. Right now that extra money in our budget is better served investing. We have 4 properties now that cash flow very well. As we increase that cash flow we are building a solid foundation for this next phase of our lives.

Jim
Jim
8 months ago
Reply to  Fred

— “Homeownership done right is often the wisest financial move one can make. ” Fred, it can be. And it can be that renting can be the wisest too. It all depends on the buying price and what you do with what you’re able to save. I think most non high-income people who build wealth will acknowledge that keeping their housing and living costs down was the key to building wealth. For some keeping costs down was done by buying, and for some it was done by renting. Either way, it’s not whether you buy or rent but whether you… Read more »

Kathy
Kathy
8 months ago

Well done for moving in the right direction regarding your finances. Sometimes a popular belief (in this case, owning a houses) may not be what is best for one. I am a foreigner working and living in the DC area. I do not own a house nor do I plan on buying one here. I checked with my bank and could not believe that I would have to pay back almost 80% fees and interest if I got a 30 or 15 year mortgage. What?!! I am better off renting, especially since I already have a few properties in my… Read more »

Wendy
Wendy
8 months ago
Reply to  Kathy

Kathy, thanks for your perspective! I think you are right in looking at what’s best for your individual circumstances, rather than following the norms. Best of luck!

Robin
Robin
8 months ago

This is an inspiring story because y’all had such a remarkable wake up regarding what you perceive to be important. No more focus on external/ appearances! It appears that each decision you’ve made since then is aligned with your new family-oriented and (dare I say it) spiritual values and priorities. I suspect that as long as y’all continue to make your choices in that “spirit” you will continue to reduce debt, expand your financial stability, and feel a sense of freedom. Way to go!!

Wendy
Wendy
8 months ago
Reply to  Robin

Thank you Robin!

Bill Konrady
Bill Konrady
8 months ago

Wendy – great article, and all the best to you and Curtis! Congratulations on making such huge progress toward your goals, and thanks to you and your family for being such an inspiration.

Wendy
Wendy
8 months ago
Reply to  Bill Konrady

Thank you Bill! Much love to you as well.

James
James
8 months ago

A primary reason for home ownership is to reduce expenses and uncertainty in retirement by having a paid off mortgage. Sounds like you’ve realized some short-term benefits, but are back to square one when it comes to home ownership. If the plan is to rent for the rest of your life, that’s going to require you to save a significant amount more to fund decades of rent payments.

Wendy
Wendy
8 months ago
Reply to  James

I have to disagree. We are not back at square one at all because our focus is now on increasing both our savings and our real estate investment portfolio. Our investment portfolio will sustain our living expenses indefinitely and when it is time to retire, we will have saved enough to buy a property outright, if we choose and if it makes sense. We do not plan on staying in San Diego – we have several places on our shortlist including some international with significantly less expense for both living and housing. There is more than one way to do… Read more »

?ukasz Hoderny
?ukasz Hoderny
8 months ago

Dear Wendy,
I am very happy for you and your family! I am sure it was the best decision you could make 😀
I live in Poland – there is also strong ,,house worshiping” as must-have to be considered successfull
Best wishes!

Aaron @ LiveYourWage.com
Aaron @ LiveYourWage.com
8 months ago

This is awesome, Wendy! I definitely agree that it’s easier to see the math and know that selling is the right decision, but I can’t imagine the struggle you went through those 6 months as you worked to get your hearts on board with your new plan. I’m glad that you made this courageous decision, and now you can shine a light for others to see. Homeownership isn’t always the right decision for everyone. And sometimes it’s just the right decision for a season, but not forever. Thanks for sharing and I look forward to reading more of your story… Read more »

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