Sweating the Big Stuff
I will never forget coming home from the hospital with that precious little girl and looking around my huge suburban home with a sense of confused dread. “What happened to my apartment?” I said. “What happened to my life?”
Big problems
I stayed home with our baby for a year, living on savings, and then went back to work full time. The baby went to daycare for ten hours a day, and most of my salary went there with her.
I was driving 40 miles north every day to work at a newspaper, while my husband drove 40 miles south to his research job at a major university. He’d leave the house at 8 a.m. and often come home after midnight. On a “good day” he could get home for dinner with me around 8 p.m.
Meanwhile, I’d come home exhausted with a cranky kid, only to have my boss call during our late dinner to tell me that something on my beat was on fire (sometimes literally) and I had to go cover it. On the weekends, instead of hanging out with friends or having adventures, we got to mow our lawn, clean the ten rooms of our lovely home and try to balance our finances.
We were exhausted, miserable, lonely and broke.
We lived like this for two years, and then things started to fall apart. First I left my job to have a second child. Having become a stay-at-home mom, I was starting to get serious about cutting the fat from our budget. I started with the small things:
- canceling our Netflix subscriptions
- scaling back on dining out
- buying store brand groceries
It felt like I was bailing out a leaky boat with a teaspoon. Something bigger would have to change.
Big decisions
We started talking seriously about moving. The housing market was starting to head south, but an opportunity popped up to buy a house near his office from a friend who’d moved to California.
We decided to go for it.
The move has saved us over $1000 a month. We sold one of our cars, and drive the other one only about 10% of what we used to. Our mortgage is slightly lower, and since the new place is a little smaller, the utility bills are less. It’s also much easier to clean than the huge, drafty house we had before.
We save money in less tangible ways too. We live in a vibrant neighborhood now, where people create and share a lot of community resources. We’re able to barter or swap for everything from clothing to childcare to soup, something we could never do in our sterile suburban neighborhood. This network of community resources saves us at least $200 a month.
Even more precious than money, this move saved us time. My husband spends more time with his children now. He walks to work, and comes home every day for lunch with the family. The reduction in our expenses also bought us the ability to live on one income indefinitely, giving me the gift of time with our girls. That in turn allowed us to choose homeschooling for our children.
Our financial picture is far from perfect. We still have large debts, and I pinch pennies to afford small treats like a paperback book or an ice cream outing. But for the first time, I have a clear plan to achieve our financial goals. I’m seeing our debt go down every month while our savings go up. And I’m enjoying every day of it as I get more time with my family, and spend less time maintaining a suburban home and lifestyle.
Big returns
Moving is not for everyone. Many people love their homes and make huge sacrifices to stay in them. But if you’re trying to get your finances under control, I encourage you to look at your life and consider the big stuff as well as the small.
Making big changes is difficult. Staging our house for sale, selling it in a down market and then moving with two small kids was a series of daunting, painful tasks. The move was financially counter-intuitive: we sold our house at a loss and took on new debt to pay for our moving costs. But the rewards matched the effort. We’re getting a huge return on the investment we made in this change, one that far outpaces the savings we saw from cutting every magazine subscription we had.
Just in case you’re inspired to follow my particular example, here’s a recent guide to how to downsize your home.
J.D.’s note: Sierra’s experience reminds me of the advice that Elizabeth Warren gives in her book, All Your Worth. She urges readers to get the big stuff right so that the little stuff matters less.
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There are 73 comments to "Sweating the Big Stuff".
Housing is one of the things we can save the most on. And realizing that a large home makes you less happy than a small one is something that goes against our ingrained beleifs about that “American dream.” I agree that above all, a small home is easier to clean!
Good article. Why cancel Netflix? At $10 or so a month it makes for one of the cheapest entertainment options available, especially with the streaming movies.
Although many of these decisions may make sense given additional context, some seem odd. Why not work part time to pay the bills and send the kids to a public school you already pay for with your tax dollars? Why buy a house from a friend when it’s a buyer’s market? Why did you take on new debt to move?
How are you going to send an infant and toddler to public school? Maybe that isn’t an option for them right now given their children’s ages or perhaps having her stay home with their children is important to them.
This is a great post. If you look at where we spend money as a society, we spend less (as % of income) on food (including eating out), entertainment, appliances, and clothes than we did 40 years ago. The 3 things we spend more on are housing, transportation, and healthcare. Your decision to downsize was a great one in many ways, and for many folks (who aren’t stuck due to the current market), it’s a much smarter decision than trying to nickel and dime their way to solving debt problems. Congrats on making a really tough decision that makes perfect financial sense
We bought a duplex and moved our family of 4 in upstairs (former owner is paying us rent for downstairs) for similar reasons. Most people thought we were crazy, until the economy fully tanked.
We still own an “extra house”, which we rent out for enough to cover mortgage and property taxes, but our monthly housing costs have been cut about 40%, and we can walk most places we need to go.
Talking about “big stuff”, we haven’t had a car payment since 1996. And we’re grateful to have adequate, affordable employer-provided medical insurance coverage, and worry about losing that, given that DH has preexisting conditions and we’re already paying thousands of dollars a year for treatments and prescriptions, even with insurance. (Don’t want to start a heath-care reform debate — just stating a big money issue at our house).
I agree that changing the big stuff is the most effective, but I wouldn’t count out changing small stuff.
Saving $10 a month on Netflix hopefully won’t make or break you.
If you save $10 on Netflix, $30 by mowing your own lawn, $10 by installing low-flow showers, $25 on eating out less, etc. and soon you’re talking about real money. If you can make lifestyle changes that will save you money without too much impact on your happiness, why not?
Congrats Sierra,
It takes a lot of guts to downsize in a world where we’re constantly given puzzled looks if we’re not upsizing. Someone yesterday posted a comment with a youtube link of George Carlin joking about why we need such big houses to keep all of our “stuff.”
B,
You ask some valid questions. If all you’re looking at is the numbers, then you’re right, they’re decisions wouldn’t seem to make sense, but it looks like they evaluated their situation pretty well and found a solution that gives them the quality of life they desire AND they’re saving $1000 a month over what they were spending before living in the suburbs.
They might have taken on a little more debt, but it looks like they did so strategically. While it’s not always the case, an important tenet of frugality is to be able to see where spending now saves later.
it is always nice to when peole share their life stories and the lessons that they learned from them because the readers most of the time get to know that that way does not work. thank you Sierra for sharing
@Sierra, great theme for a post.
Too many frugal people are actually cheap and OCD. I’ve seen too many waste hours to save 50 cents rather than taking on the big things like where they live.
My husband and I just moved to a new city. We had lived in a large city and he was 30 mins from work, had a more demanding job situation, but we still had the small townhouse we bought in our mid 20s. That townhouse was our saving grace. It was very nice, but small with a small yard. I could easily handle all the work myself, inside and out, and it was well within our housing expense range.
Then we moved. We wanted a larger home with a larger yard, but we had stipulations. The main thing was the house was within 10 mins of work. The second thing is the house would fall well within our housing expenses and we could afford someone to do the yardwork, thus saving my allergies and saving my husband’s time. We found all that – a beautiful home, close to work, and very affordable to us (including the lawn service). But we couldn’t do it without having stayed in that townhouse for all those years. The money and sanity we saved living there was well worth it. I’m glad when we did decide to upsize it was on our own terms.
I love hearing inspiring stories, especially about couples who downsized their homes to save money and are happier they did it. I am curious about this comment:
We live in a vibrant neighborhood now, where people create and share a lot of community resources
Did you know ahead of time that this new house was in a great community? Or was it just a happy accident?
-Little House
Great anecdote of someone who couldn’t afford to live in the big city, and has now moved in thanks to the housing downturn. Good stuff! So many think it’s cheaper to just buy a cheaper house in the suburbs and commute rather than pay for a more expensive house in the city. It’s just not true a lot of the time.
Life happens always, and if you are able to have a nice place in a vibrant community, then go for it!
I have always felt trapped since buying a home. It’s not too large for our family, there is barely enough room for all of us (there are four in one bedroom, two in another.) But we are unskilled at maintenance despite classes, instruction books and much trial and error. Now all I see is the broken toilet, the shower that refuses to hold a rod and is therefore unusable, the kitchen floor in bad need of replacement, and the bank balance that laughs at all these projects. We’ve never benefitted from the tax break of home ownership because our tax liability is low.
I miss renting. I miss being able to call and have problems taken care of. I am tired of living under this slumlord (myself) and am ready to move!
Home ownership is not for everyone.
My husband, daughter, and I live in a 1,053-square foot home (with a basement) and I always say I don’t want to clean any more house than what we currently have. Our home is still large enough to comfortably raise several children in, and our utilities are half of what some of our friends in larger homes nearby pay. We don’t always understand what motivates families to buy 3,000-square foot homes. We’d rather put that money toward other important things.
This is a really inspiring post. I often wonder how the American Dream turned into a owning a huge house that you never have time to enjoy, and having a big family that you can never spend time with. My parents never made a lot of money, but they spent a lot of time with my sister and I. When I look back at my childhood, I remember all of the fun things we did as a family, and I would not change that for the world. Not even if it meant designer diggs all the time and a fancy car on my 16th. Real happiness comes from living a life with those you love and enjoying what you earn.
Way to go Sierra! I made a big change like this 18 months ago. Moved from big suburbia house to in-town and close to everything. I know my neighbors. I’m 4 miles from work. My kids can walk to school and to daycare (on the same street). And the neighbor boy mows my lawn for a small fee. I’m renting because I’m a single mom and am too busy to handle repairs myself. We are happier with less. Thanks for sharing your experience.
We did a similar move 10 months ago, although we rent rather than own. We moved from a house to a duplex, saving $175/mo on rent alone. Utilities are cheaper, because it’s smaller. My husband is now 1 mile from work and we are in town rather than on the edge of town, so gas is cheaper. We also save time and money by not doing yardwork anymore, the landlord handles it, plus we could sell our yard tools. In the process of the move, we sold furniture (that guest room suite that was only used once or twice a year). It has been win-win all around for us.
Great post.
What a great story.
My partner and I are gearing up to purchase a home in the next few years – and we will really have to consider the location, the size, and what our needs and wants really are.
This is a great story. Time is our most valuable resource. Time both to ourself and to our family. I don’t know how your husband functioned with his total lack of time when he would get home around midnight.
Your change looks like it saved more than just money and time – it saved your family. By that I mean you have so much more quality time together and you don’t always have to be rushign around. When I look to buy my first house with my wife a couple years down the road, I will take your experience into consideration.
When you bought the house in the suburbs, was there any tingling of doubt at that time? Gut instincts that were going crazy when you bought the house, telling you it was a bad thing to do?
I’m happy that your situation worked out, but it seems that you started out as a “city person” — loving your apartment and life you had then, but then you chose to go out and buy a house in the suburbs. What was that, and how has it colored other decisions you may have made? Are there aspects of your new living situation that you don’t like? Are there unexpected expenses that you didn’t think of, or will face in the future as a result of your move?
My best friend and her husband sold their suburban home in the down economy to go back to being renters for many of the reasons outlined here.
My boyfriend and I decided that we will always rent, and that while our current place (we downsized our rental from a 3 br to a 2 br) is at the edge of how small we can go, it’s certainly easier to clean and manage and is in a better area than we were previously.
i like the messages: most people have 100% more space than they need, commuting is wasteful and expensive (though many can’t avoid it), and city living has cultural and economic advantages, among others. essentially: the generic american dream is not a very good one and people should spend more time coming up with their own goals instead of buying into prepackaged ones.
but i’ve got two comments related to the statement that you’re only using the one car 10% of the time:
1) you must not be going to work any more, right? did you quit to take care of the kids? get a different job? i’m not seeing anything about that part of the story.
2) if you really use your car that little you should look into car sharing. if it’s available it will save you another big stack of cash.
It’s really great that you downsized your home–not many people are willing to do that until the sheriff is at the door. Congratulations on doing it in your own time and on your own terms.
One of the issues with a big house not many think about is the quality of family time. In a big house–ten rooms certainly qualifies–kids can grow up in a family without ever participating in it. Everyone goes off to his or her own space–since there’s plenty of it–and not only do the parents not know where the kids are when they’re outside, but they may not be too certain where they are inside the house either.
While it’s possible to foster a close family unit in a big house, closeness does work better in more limited spaces where members don’t have so much opportunity to slip away from the group. Beyond a certain point, more living space becomes counter productive on a number of fronts.
I think Ramit gives the focus on the big stuff advice too? It’s pretty wise. Fantastic article, Sierra. Your location is so important to your psychic health as well as your finances. I have a number of friends who bought property they weren’t totally enamoured of because they felt it was the next step/the thing to do (at home in Ireland, where the housing market has not just collapsed, but slipped into the Irish Sea and sunk) and the constant-pain-in-the-chest stress they’re feeling is really upsetting.
Sierra – Thank you for a delightful, insightful post. I think the issue of “life-style creep” is not discussed nearly enough (ie that along with the big house comes… more to clean, having to bring a “nicer” bottle of wine when you visit the neighbors, pressure to dress “better,” etc.). There are so many benefits to downsizing – financial and psychological. Go you for highlight them! Manisha
@MichaelM #6: The way I convinced myself to give up certain small expenses (the big one for me being soda!) is by plugging the numbers into a debt calculator. I was buying a bottle of soda a day (at least $30 a month!). Once I realized I’d be debt-free six months sooner if I put that towards my credit cards, I quit buying soda pretty quickly!
Good reminder that the big stuff is where we really spend/waste our money. You’d have to find 100 “Netflixes” to get the benefit these folks found from buying a smaller home.
I went through a similar experience with my ex-wife, wanting to downsize our then too-big and too-expensive home after struggling for a year or so. We didn’t and eventually it was too much and we divorced. (Other things led to it too, but money was at the top of my list.)
Because of my experiences, I’ll sit my kids down before they consider buying a home and really explain to them what it means and how much it costs. And that it’s not always everyone’s American Dream.
Good for you! I also have resisted moving to the suburbs to be with all my friends and family, and have stayed in the city with my daughter. I have the advantage of being able to walk to work (therefore dropping one car from our situation), I have access to a vibrant city life with all its cultural and entertainment advantages, and I can clean my house all by myself without too much effort.
I have to admit that I do have some regrets when I visit my friends in their shiny new, giant houses with huge backyards, but this regret is VERY fleeting. I much prefer using the local park as my backyard, since I don’t have to mow it.
Excellent post! Not only did you save yourself money, but it sounds like you found a lifestyle that really works for your family. Many people aren’t willing to downsize and are left exhausted trying to keep all the balls in the air. Good for you – very inspiring.
I’m left with a 2300 square foot house after a divorce with a downsized family 🙂 and I would like a smaller house – maybe 1800 or even 1500 square feet. However, it doesn’t seem like it would save me all that much money – maybe $200-$300/month, at which rate it would take years to pay back the realtor fees.
Hi Sierra.
It sounds like your family and ours share similar experiences and values. Last year we also down-sized (from a 2,600 sqft house to a 1,200 sqft house). We have a large garden, lovely new neighbors, and home school our children.
We are enjoying many of the same benefits as you do, though I have to mention that we experience quite a bit of negative judgment – from both people we know and people we just meet. There has even been a little on this forum. Do you find this as well?
Thank you for your post. It’s affirming to see others going against societal norms in order to have the life they want to have.
Greg
To those thinking of buying a home, I recommend a piece of advice from Clark Howard: Try the commute (during rush hour) first.
This recently saved me. My husband and I found the perfect home at the perfect price. I did a “dry run” by driving out to the home early on a Monday morning and leaving the driveway of the home at 8am. It took an hour for me to get to work (half an hour more than I am comfortable with), so we had to call the agent and tell her that home was out.
Congratulations on making the move and finding a neighborhood which works for you.
I am not sure where all the savings is coming from-is it from transportation costs? You mention that the mortgage cost difference is minimal.
My suburban neighborhood offers the same type of community you have found- we share tools, babysitting and dogsitting duties, food from the garden, etc. I guess the hours you worked didn’t leave much time for friendships. I see this argument made often on blogs as a reason to move away from the suburbs, which many, like you, have concluded are sterile and isolating. I guess I don’t see it as a given.
It is apparent that the savings in time is the big payoff-again, congratulations.
I’ll concur with Minderbender about the community statement. I live in (and grew up in) a suburb. My parents were also active in my schools (PTA) and other community activities (church, Scouting, food pantries, dog clubs, etc.). They have met lifelong friends living in the suburbs. My in-laws live in an extremely rural area, yet participate in community groups like the Rotary, science club and singing groups.
I’ve also lived in denser urban areas where no one talked to each other, too. Where I live now, my kids play with other kids and we know our neighbors to some extent. I think having young kids definitely gets you into a community, since you end up attending activities with your kids that bring you into contact with other parents, who are looking to have an adult conversation while the swimming, dance or gymnastic lessons are going on!
I would argue that the community is probably just as much about what you put into it as much as you get back, and the main killer of the ability to feel connected with the suburban folks was lack of time and not the architecture. There are plenty of ways to get involved pretty much anywhere you live, you just need to make the effort to get out there and get involved with something if you want to do something in the community — whether you live in the city, the suburbs or the sticks.
I’m glad you are liking where you are living now — but the suburbs don’t have to be the culturally barren wasteland that many people seem to think that they are.
To each, his own. My DH and I both grew up in more rural places that a lot of people wouldn’t even call a neighborhood and where driving to a job is required if one wants a job. He hates the city and I was tired of small town busy-bodies so the compromise is the suburbs where we both work so no commute is longer than 20 minutes. We never thought of getting a big house. In fact, we lived in about 3 different states in the last 20 years and we have always tried to live close to where we work and not take jobs very far from each other. Once when we could only afford one car we moved so that he could walk to work (of course we were only renting) but we were still in the suburbs. It seems like in this story they were misunderstanding the American Dream. I wonder like one of the other posters “When did the huge McMansion become the dream?” When we were kids having a house that was comfortable with a yard to play in was everything.
This post is already one of my favorites. It emphasizes balance, which is sometimes missing from frugality advice. Sierra understands that saving on the large items produces the biggest results, but she still canceled her Netflix because the little stuff matters too. It seems that she and her husband had/have good careers, but they recognized that they also valued time with their family. And she recognized that there’s a balance between being responsible and buying a good lifestyle. Sierra and her husband sold in a down market and took on additional debt. But it sounds like they’re getting a great ROI on that investment. As long as they have a plan to get rid of that debt and save for their girls’ education (and stick to that plan), they’re doing fine.
One additional detail that I’d like to see is her plans for financing her daughters’ educations. Since she’s focused on her family, I’d like to know how she’s planning for that potentially gigantic expense.
We have resisted moving to anyplace where we would have to commute by car. I’m extra glad of it these days – the half hour walk with my son to daycare each morning is some of our best time together. I would hate to lose that talking, jumping, hand-holding time to driving time.
There *are* suburban neighborhoods with great vibrant communities…but if you’re commuting for an hour each way, how do you have time to get involved?
Good post. Interestingly, a smaller house where I live would have cost us more than a larger home. They’re either new and shiny and in town and thus more expensive, or dumps requiring tons of rehab that would have cost us too much in time, money, and energy. In the end, we went with a bigger, slightly older home that was well maintained, outside the most “popular” areas in our town but not far away from work, etc, and gives us room to work on our room-intensive interests. Smaller may not be cheaper. It is about value, and it’s worth looking at things closely.
Sierra,
I can relate to your story completely!
Many times in North America we find ourselves lost living up to other people’s ideals instead of our own. Even our quest to remain frugal is sometimes used as an end to achieve the dreams of others, and this is NOT okay.
Frugality should be a lifestyle used to achieve what WE want to achieve, not what others want for us.
As for the experience with the suburbs, I too moved to the ‘burbs a little over six years ago, and found this area much more cold and isolated. Our commutes became longer, and you simply can’t put a price on that precious time spent with family.
I for one believe you made a very intelligent decision for YOU, not for the gains of others, and you put your family and lifestyle first while remaining frugal. Very wise move indeed.
— “If we are not careful and do not properly tend to our own destiny, there are many others who are more than willing to tend to it for us with their own plans in mind…” —
I think that the “big” stuff and the small stuff deserve equal attention. I think depending on your situation will depend in which order you go.
If you are in dire financial straits, the big stuff needs to get done first and foremost. Then, move onto the little things.
If you are not so bad off, maybe knock out the little things first.
I say this because most of the time the nature of the small things or the time involved to impact them is minimal. Most can be fixed with a phone call. The bigger things like mortgages and what not seem to normally need more research and more time devoted to them
Great post!!
I must say, when I first saw the home of a couple we had recently met, part of me envied the nice new… well, everything. Our house is in the ‘burbs, built in the mid-50’s… well-built, but smaller, without the nicest amenities. However, this couple is house-poor and we are not (I’ve even hired a housekeeper so I don’t have to spend my weekends cleaning). AND we just refinished our hardwood floors in our entire main floor living space ourselves this past week, so I am especially grateful my house is a reasonable size. Hubby and I agree we’d rather keep our more modest home and spend our money on other things.
Great article, but I think your problems started when you and your husband had jobs that were 80 miles apart, forcing you to live in the middle. No one’s going to be happy in that situation. I think the house itself was moot; you got happier when you gave up your job and you moved to be closer to your husband’s work.
Once you’ve experienced being able to walk to work in minutes, it’s hard to go back to commuting long distances. 15 minutes rush hour would be the max I could ever put up with.
Great post! Personally, I never understood the desire for McMansions. More space to clean, more rooms to heat during winter and cool during summer, more grass to mow, and unless you want to fork over $1.5 million or more for an inner city home, one hell of a commute.
I sacrificed a two-story, five-bedroom home in the suburbs for a 725 square foot home 7 blocks from my downtown office–and I love it. I save myself 10+ hours of commuting per week. I don’t get a reduction on the property tax bill, but the time savings is worth it.
Oh man, great post. Talk about analysis of opportunity costs. So many people would look at selling in a down market and balk — it would be a “loss” to them. But even if you forget completely about the time and sanity you save (which is no doubt beyond price to you), even going by the numbers you are saving cash that you would not have saved if you had stayed.
What was the planning process for where to move? I assume since you’re now a stay at home mom (at least for now) you located close to hubby’s job in order to save on car travel like that? What are your feelings about possibly re-entering the workforce and what you would do there? Would you find a closer job, or would you try to get back the same job and wage the commute?
Well done. Sometimes, you have to spend money to make money. Paying to move and downsize a house, in this case, is a fine example.
Making good choices on the big items saves so much money and aggravation over the long term. Loved this article for all the reasons others have stated – balance, frugality on a meaningful scale, evaluating priorities, analyzing opportunity costs.
@Peggy (#13) – I sympathize with your situation as nothing makes me hate my house more than broken stuff that hangs around unfixed. We’re lucky in that my guy is fantastic at fixing stuff and I’m okay at it. My advice to you, since you’ve already tried books and classes, is to look to your kids or to friends with whom you can barter. It’s weird to think of our kids being able to tackle tasks that we can’t, but my guy grew up in a situation where from the age of 8 he was better at fixing things than anyone else in the family. At first he got yelled at for trying to fix things, and once they threw out something he’d nearly fixed and he was punished pretty harshly, but over time they learned to trust his inquistive mind, perseverence and innate understanding of how things work. Maybe one of your kids is old enough and has an intersest in this stuff. If not, what do you do well that you could barter with a friend? Getting those things fixed will make you feel so much better about your house.
Great post, Sierra. I’ve known people who work so hard to have a bigger house only to find that the kids are grown within a few of years of acquiring the big house.
Avoiding long commutes and living in a neighborhood with friends nearby is worth so much. I wish there had been blogs like childwild when I was raising my son.
Excellent post.
My only caution – which may not apply to the OP’s own situation – is that people often do not take into account the opportunity cost, long-term, of stepping out of the job market to be at home full-time. Of course there are other considerations that may be more important, but so often I hear this expressed as “but after you deduct daycare from my salary I only make $2 an our anyway so it wasn’t worth it!” and it makes me cringe.
Rachael @14, for some people, a larger house may well be “important things”, if they have a large extended family, entertain friends often, or engage in pursuits that require them to use a lot of space. Having a big house because You’re Supposed To is a bad idea, but it’s an equally poor idea to assume that because X is not important to me, it shouldn’t be important to you, and anyone who has X is foolish, wasteful and simply doesn’t understand the right way to live.
There really is a deeper message here I think. When we think about being frugal or thrifty or what ever label that goes under, we often think about *trimming at the edges*. We start clipping coupons, passing on the Starbucks lattes, cutting back dinners out, etc.
But sometimes that isn’t enough. Sometimes you have cut cherished lifestyle choices, like houses, cars and even education to make a real differnce. The big things (houses and cars) are what we have, the little things are often what we do (lattes and dinners out).
By cutting out the big things, we leave more room in the budget for the small things that we like to do, and that may be more worth preserving than the keeping the big stuff and the cost it carries.
Several people have commented on the fact that Sierra left the workforce to be home with her children. I stay home with my own daughter and wanted to point out a few things.
Mythago: What about the opportunity cost of going to work? Is it always worthwhile to exchange time with family, or time with young children who will not be young for long, in order to make money?
Here’s something else to consider: My husband and I live in a smaller house with lower taxes, and if I were to work, it would bump us into a higher tax bracket and negate some of the benefits of working.
Aside from that, my husband has noted our household operates more efficiently with me at home. I’m not coming back from a long day at work and trying to squeeze in grocery shopping, fixing dinner, housecleaning, and quality time with my husband and daughter. I also take care of business my husband can’t always do while working, like taking the car for an oil change, greeting the repairman, calling the insurance company about an issue, etc. My husband says it’s less stressful for him when he can come home to a peaceful, organized, tidy home.
Also for mythago: For people with large extended families or people who like to entertain, how often do they really utilize all the extra space in a large house? Maybe a few times a year? If it’s worth it to pay double for space you use perhaps 10 or 15% of the time, go for it. Or if the immediate family is large – say, five or six children – then I could understand the benefits of a larger home.
I think this is story is about more than downsizing a house. Sounds like she took the first step when she quit a demanding job to stay at home. Would she have been able/willing to make the move had she still been working?
This strikes me as a variation on the 80/20 rule. The “big stuff” is the 20% (of your bills ?) that contributes to 80% of your expenses.
I applaud you. As a recent ramsey convert – he pretty strongly ‘suggests’ (ha!) that you need to worry less about other people think.. so for me, that meant moving back with my folks after a trip for a couple of months. I saved enough money for the trip, and now living w/ my folks, I’m able to put 4x the amount towards my debt repayment. Yup, it sucks being older and living with parents, but when i’m debt free, I’ll be laughing.
Sometimes working smarter, not harder (or longer!) is key…
Excellent move on your part! As an egotistical little reader, I love your eloquent confirmation of my own suspicion that bigger ain’t necessarily better.
And Peggy (13) is right on in observing that for some folks renting is preferable to owning. Though I own my house and don’t especially want to go back to renting, I have to admit that owning is a lot of work, a lot of hassle, and a lot of expense. For busy young two-earner households (or single-parent households!), paying a landlord to be responsible for maintenance & repair has a lot to recommend it.
In 40 years of apartment- and house-dwelling, my friendliest neighborhood with the most “community” was located smack in the middle of the city. A dear friend and her husband built a beautiful home in a far-flung suburb with an onerous commute to both jobs. The HOA has been a fiasco, the neighbors all hate each other, and two of the residents make a business of harassing people. Instead of looking forward to retirement in the lovely house, my friends are planning to sell it when they retire and move as far into the New Mexico or Texas sticks as they can get. Jason (34) has it right when he says “community…is what you put into it.” Some people put in eye of newt and toe of frog!
One of my favorite posts. We downsized 13 months ago, but in the opposite direction. We went from a big house in a major city where the public schools were horrible, to a much smaller home in a well-established small-town community with excellent schools. We were very loathe to give up our “big city” perks. Now we find ourselves riding bikes, walking through town, going to small festivals locally, etc. Our monthly expenses are half of what they were before and we love the community. It’s all about what fits your lifestyle. And the little house we live in now? Love it!
Joe Morgan (53)–“This strikes me as a variation on the 80/20 rule. The “big stuff” is the 20% (of your bills ?) that contributes to 80% of your expenses.”
Totally brilliant!!!
For a lot of people, cutting the big stuff is the only thing that’ll make a real difference. Cutting a bunch of little stuff that only take up 20% of your budget (before cutting) will not only not make a big difference in your expenses, but it probably will make you pretty miserable! Meanwhile the big stuff–that’s eating up 80%–sits untouched, and often sacrosanct.
“We can’t sell our home” and “I’m not ditching my car for a beater” while you’re canceling dentist appointments and eating beans and rice every night seems counterproductive on so many levels.
I wish my parents would get this message. We’re house poor and in enough debt that any sane person would file for bankruptcy. Instead of starting over and learning to live at their means, in a smaller house, my parents are desperately trying to claw their way out of debt by cutting out the small things that make life enjoyable. All in the name of saving “The House.” Still we’re operating at a deficit of 300/mo. and my parents are unwilling to give up the things THEY WANT (cable, internet, etc.) I have to advocate for things I NEED, like medicine and clothes! They are in utter denial. We cannot hold onto the American dream…for me it has truly become a nightmare.
When you’re house poor in the suburbs, your home becomes a gilded cage (ours isn’t really even gilded). I would (and will!) happily live in a one room efficiency if it allowed me to pursue hobbies, visit parks, have a vacation, go to a play, eat out, maintain a basic wardrobe, cover health treatments and preventative medicine, or actually control my debt and savings. Now, as soon as I can find a job paying a living wage–I’m outta here.
Berteq (58)–you might want to show them this post and the comments that follow.
A house is a good thing to have, don’t get me wrong, but it should never ascend to the level of being a temple that has to be preserved at the risk of all else.
Great post of how things can change for the better even though the short term loss can seem big. Commuting by foot is what I have been doing for 7 years. Saved a ton of money to pay extra on the mortgage, and had enough free time to start my own business from home while keeping up with my kids. Also allowed my wife to homeschool, I’m concerned about upping my commute time to 10 minutes by car!
Rachael @51: I’m really not sure what you’re talking about. “Opportunity cost” is not a value judgment; it’s about money. If I spend an hour watching TV rather than doing consulting work at $100/hr, my opportunity cost of that TV-watching is $100. Now, that doesn’t mean that I should skip the TV-watching. Maybe I really, really need that hour break. Maybe it’s a TV show that has useful information that will help me develop my professional skills. Maybe I’m watching my mom performing on American Idol.
Similarly, the fact that one parent stepping out of the workforce has an opportunity cost has nothing to do with whether that’s a good or bad decision for that family. But we’re talking about choices affecting family finances, right?
As for people with larger homes, I would imagine that decision is best left to those people, just as your family’s decision to have your husband choose wage-earning over being home with his children is best left to your family.
I’m a sahm with 9 kids. We live in a very small home on a modest income. I often meet working mothers who say they wish they could stay home, but when push comes to shove most aren’t willing to make the changes that will allow them to do so.
Bravo to you for making the move!
@mythago: with all due respect, opportunity cost is not simply about making money. Opportunity cost is defined as the “cost” of forgoing an alternative decision. (Here is a good example: http://www.econlib.org/library/Enc/OpportunityCost.html) That “cost” (in economic terms) can be one of the four finite factors of production: time, capital (money), natural resources, or labor. The opportunity cost of going to work after high school, for example, is the lost time one could have spent going to college instead.
The point of opportunity cost is to remind us what next best alternative we are sacrificing. A person who goes to work rather than staying home with kids is sacrificing the opportunity cost of time spent with those kids. Likewise, a person who buys a large home deals with the opportunity cost of lower bills (capital), lower taxes (capital), and less time spent cleaning (time and labor), among other things. To separate opportunity costs from value judgments makes no sense: opportunity cost is all about considering what values you chose to reject in favor of your chosen decision.
One final point: you argued that this article is about family finances, but that’s not true. Finances in the article were just one of the many issues the writer was dealing with, including fatigue, lonliness, and overwork (both from the job and the house). As I said before “cost” in economic terms is not merely about money, as the article above so sagely notes.
Great story. Consumer debt is usually a big reason why house payments become tough to make.
Nestor @63: This article isn’t about family finances? Then what’s it doing on a financial blog, and talking about how their move saved $1000 a month?
“To separate opportunity costs from value judgments makes no sense” – with all respect, please read what I actually wrote. I said that opportunity costs aren’t value judgments. In other words, the fact that choice X costs money doesn’t make it the wrong choice, any more than the fact that choice X increases a family’s income makes it the right choice.
What I was disagreeing with is the notion that when weighing the costs of staying home vs. remaining in the workforce, the only economic weight is “what’s my net income after paying for daycare?”
Mythago: I still am puzzled as to why you singled me out when most of the other people commenting on this article also hold my views about large homes. Nevertheless, I didn’t come to this blog to pick fights. I will not respond to any more of your comments until I can feel like I won’t be talked down to. Until then, good luck finding someone else to argue with.
I think a lot of people are making the same type of move or want too. I myself am planning on trying to sell FSBO even in this market. It started because my DH and I realized that if we stay in our current home we need to refinance due to current rates. We realized that we do not want to stay in the suburbs and drive in. We have no kids and hate the burbs. Why did we buy a house here??? Because it is what was expected out of us by our parents, real estate agent, etc. That is what you are supposed to do right? Graduate from college, get a job, get married, move into the suburbs and start having children. It was not the right decision for us. If we can ever get rid of the house, we plan on renting closer in to the city. I agree with many others that owning a home is not for everyone. I have figured out how much we spend monthly and think that we should be able to save at least $400 a month by renting. My american dream is not to own a home but to be able to retire one day and not work until death.
@mythago:
“This article isn’t about family finances? Then what’s it doing on a financial blog, and talking about how their move saved $1000 a month?”
I wish you would not have erected a straw man out of my first sentence in that paragraph, but I suppose I deserve it, since I should have inserted the term “exclusively.” That said, I would remind you of what I said immediately after that: finances in the article were just one of the many issues the writer was dealing with, including fatigue, loneliness, and overwork (both from the job and the house).
At any rate, this is not an *exclusively* financial blog. In fact, the contributors frequently discuss life-balance issues, including getting rid of clutter and the importance of vacations. The article above is an excellent example of this, having dealt extensively with issues of commuting time and time invested in home maintenance, all of which translate to lost family time and exhaustion.
“I said that opportunity costs aren’t value judgments. In other words, the fact that choice X costs money doesn’t make it the wrong choice, any more than the fact that choice X increases a family’s income makes it the right choice.”
But that’s just it — opportunity costs *are* value judgments. By definition, accepting your given choice over the alternative means that you apply a higher value judgment to your chosen course than the alternative. If you didn’t, you would have taken the alternative instead. Your own opportunity costs are a reflection of your own personal values.
“What I was disagreeing with is the notion that when weighing the costs of staying home vs. remaining in the workforce, the only economic weight is ‘what’s my net income after paying for daycare?'”
That’s fair enough — using “economic weight” is a more precise and accurate term to your argument than the way you employed “opportunity cost” earlier. (I would note, though, that there are several other economic weights beyond daycare, including lower income taxes, probable savings on gasoline and car maintenance, and potentially more efficiency when it comes to things like grocery shopping.)
I wish I could read stories like this more often. Moving into a smaller home? Selling one of your cars? That is beautiful.
I try to advise a lot of people to do this but they can’t! To caught up in social status.
While media propaganda tends to steer people towards believing that Credit Cards and over spending is the big problem… the truth is that the biggest problem for most people is their HOUSE… and CAR Notes (especially the house).
If people could make sensible decisions on these things, then life would be so much easier for most.
Very interesting story.
Personally, having a big house and a large garden is a dream, not to impress anyone but because I feel claustrophobic in the city and can’t wait to finish university and getting out of our tiny apartment. I need large spaces and preferably spaces that I can call my own.
Moreover, my view on apartments and small houses in the cities is that they mostly function as efficient ways of storing labor – like a factory where all the workers are stored on their own little shelf. I don’t like that feeling of being a mean instead of an end and I am willing to sacrifice a lot to avoid this feeling.
Luckily there are many great places on the countryside that are really cheap, cheap enough to make up for the increased costs of transportation.
Great post. My husband commutes down a flight of stairs to work at home. He began doing this five years ago and it has benefited the entire family. He’s much more relaxed at the end of the day and he spends more time with the kids. He’s the only father who volunteers in our daughter’s classroom–the only father who CAN because he’s right down the street.
I don’t understand the McMansion craze. A huge house is just more to heat/cool and more to clean. I’m going back a few years, but the PBS reality series Frontier House featured a wealthy family who had to live in a two-room cottage on the prairie. When the series was over, they moved into a brand new mansion which the parents, who had spent years planning and building it, now hated. It was cold and impersonal because there was too much space–it kept the family distant. They missed the close quarters of the cottage which kept their family close. A smaller house definitely has its merits.
Well this is beautiful advice if you actually *can* sell your house.
If you’re underwater but not bankrupt, you can’t sell and are forced to default. If the bank lets you default, that is. You could sell short — if you have the difference in cash. Do you have $30K sitting around waiting to be spent on unloading an “investment?”
In fact, name one other “investment” owned by the average American that you can’t sell and are in fact obligated to continue paying for.
We bought our home (a small one in a modest neighborhood) with a traditional, conservative 30-year mortgage — just like all the Smart Peopleâ„¢ told us to five years ago. Maybe it wasn’t the smartest decision in hindsight, but everyone at the time praised it as wise and careful. And truthfully, we can “afford” it — if we live like Sierra was.
We’d love to get out, downscale, live simpler. We’d love to work less and spend more time together. We’d take the loss in a heartbeat if it were even possible. Keeping this house has nothing to do with social status or quality of life — we’re in thrall to the mortgage bank, plain and simple. The only way out now is to quit a job and declare bankruptcy, not exactly in line with my fiscally conservative upbringing.
Or we could do what we’re doing, keep working 100hrs/week between us, shipping the kids to daycare, and barely making the mortgage until the house is back above water.
I wish I could send this post back in time to myself five years ago.