Unintended consequences: The side effects of our financial choices

I just returned to Portland after a week in New York City, a week during which I spent five days packed with personal-finance meetings and events. (I'll have plenty to say about those meetings and events in upcoming articles.)

While I was away, Kim was responsible for managing our tiny little household — one puppy and two kittens — all by herself. This proved challenging since she was also working twelve-hour days as a fill-in dental hygienist.

“I'll tell you what,” she said when I got home. “This week taught me just how important quality of life is.”

“What do you mean?” I asked.

“Well, because the animals were home alone all day, they needed a lot of attention every evening. Like three hours of attention. Especially the dog. On the days I worked across town, that meant I was getting home at 6:00 or 6:30 and having to entertain the animals until bedtime. It didn't leave me time for anything else.”

“That sucks,” I said.

A Pile of Fur

“It was frustrating,” Kim said. “But one day I worked at the dental office just up the street. I walked to work. I had so much more free time. I had more free time in the morning, and I had more free time in the evening. The dog was still wild when I got home, but I got home at 4:30, which meant I had time to take her for a long walk before dinner. And I still had that done before the time I'd been getting home from the offices across town.”

“Sounds like you should try to get a job at the office up the street,” I said.

“I agree,” Kim said. “Even if they were to pay me less money, it'd be worth it for the increase in quality of life.”

Secondary Effects

Kim's observation is nothing new, of course. For a long time, I've preached the importance of picking homes and jobs that match your lifestyle — and encouraged folks to live as close to work as possible. With few exceptions, a long commute is simply wasted time (and wasted money).

But her comments reminded me of a conversation I had during my week in New York. Somebody — and I can't remember who because I didn't take notes during this particular discussion — was describing the importance of what they called “secondary effects” and how people generally forget to factor them into their decisions.

“What do you mean by secondary effects?” I asked.

“Well,” my friend said, “when you move to a new home, the primary effects are those that are most obvious: the layout of the home and how it influences your life, the quality of the neighborhood, the cost of the mortgage.”

“That makes senese,” I said.

“But the secondary effects are those that you and other bloggers write about. What is your commute like? Can you walk to do your errands? If you're moving from another region, how's the cost of living compared to your old place? What do your neighbors value? And how do all of these things align with your goals and values?”

“It sounds to me like you're talking about side effects,” I said.

“Exactly,” my friend said. “Most of the time when people make money decisions, they only consider one thing — or, at most, a handful of things. They don't often think about the side effects.

As I say, I don't remember who I had this conversation with, and that's too bad. I'd love to give them credit. At the time, it seemed like a minor discussion, but I've been thinking about it for days. (This is why I usually carry a notebook with me!)

I've come to the conclusion that the side effects of our financial decisions (and other major life choices) generally have a greater impact than the primary reason we make the choice. So, for instance, if you buy a new car because you're tired of your old one, the primary intended effect is that you have a new vehicle that is a pleasure to drive. But the secondary effects might be increased debt and/or lower savings, reduced (or increased) fuel consumption, and higher insurance rates.

A Real-Life Example

Here's an example from my own life: When I bought this condo in 2013, the primary effects were a loss of $342,000 in cash and re-location to a very walkable neighborhood. (I intentionally chose to live in a place where I could walk for 95% of my errands.) But there were some side effects I didn't consider:

  • The HOA fee is a burden. I pay $535 per month, which covers landscaping, maintenance, gas, water, and sewer. That seems like a lot. (Yes, I'm aware that if I owned a single-family home, I'd probably spend around 1% of its value on maintenance each year.)
  • There's no escaping the sun — and rain. Because we live on the top floor, there's no shelter or shade from the elements. Sounds minor, but it keeps us from spending time on our balcony. The HOA bylaws prevent us from erecting a permanent structure to alleviate the problem, so we're left with an umbrella that sort of works. But not really.
  • The puppy has no place to play (or poop). When I bought the place, of course, we had no pets — and had no plans for any. Although both Kim and I love animals, we'd only just begun to date when I purchased the condo, and we were both more interested in travel than nesting. After 4+ years together, our priorities have changed. Now we have a puppy and two kittens, all of whom wish they could spend more time outside. We walk Tahlequah 2-3 hours per day, but it'd be nice if we had a yard.
  • There's limited parking. When we have people over for dinner or drinks, it can be a hassle — especially if there's an event bringing traffic to the nearby amusement park.
  • Groceries are expensive. This is an upscale neighborhood with upscale shops. Sure, I could drive to less-costly places to buy food and household goods, but that'd defeat one of my primary goals (walking for errands). So, I mostly shop at the local natural-food store, which offers good quality but at a price. On the rare days I drive — like yesterday — I make an effort to stock up at a chain grocery store while I'm out and about.
  • We're closer with our neighbors. Because there are 39 other units in this building, we see folks every single day. Fortunately, we're outgoing and we like the other people who live here. But we definitely did not count on the social side of things when we opted to buy this place.

I could go on, but I think you get the point. I picked this place because of its location and because the cost-to-value was fantastic. Plus, the view is amazing. Just look at it!

Autumn in Portland

But there were a lot of side effects that came from the purchase. Some of these were surprises and I would never have guessed them (the pet problem, the exposure to the elements), but some I could have foreseen (the parking, the expensive shops, the social aspect)…if I'd spent some time thinking things through. Would being aware of these consequences have altered my decision? Probably not. But I think it would've been smart to have considered these things before making my purchase.

The Bottom Line

It's not just secondary effects that we ought to be more aware of. For large moves especially, there are often tertiary effects. From my example above:

  • Because the sun is oppressive during the summer, Kim and I don't grill as much as we both would like.
  • Because the cats don't get outside as much as they'd like, they're too bold when they do get to explore the patio. (They climb onto the railing and walk it like some furry little acrobats four floors above the ground!)
  • Because groceries are so expensive, we eat out more often.
  • And so on.

Again, some secondary effects are tough to foresee. (And I'd argue that nearly all tertiary effects amount to blind spots. You just can't be aware of them until you actually experience them.) All the same, there are still plenty of side effects that can be predicted — especially if we take time to think through our decisions.

For example, many folks seem to forget that when they buy a home, they're going to want to furnish it. I'm not sure why, but this is a huge blindspot for lots of homebuyers. It shouldn't be. With just a little foresight, you can predict how much you'll need to spend to set up your new place. It doesn't have to be a surprise.

The bottom line is that I now have a new goal: When talking with people about their financial decisions, I'm going to encourage them to look past the obvious, past the immediate intended consequences. I'm going to urge them to consider possible side effects and how those could change their lives.

Now I'm curious. I'd like to hear from you. Do you have a particularly good example of side effects — predicted or not — that have come from making a big move? (Or from a small move, even?) What sorts of secondary effects have you experienced in your life? Better yet, what sorts of tertiary effects have you encountered from your decisions?

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Shara G.
Shara G.
4 years ago

I’m sure I have ideas, but I’d like to comment on your condo situation first: 1) Cats will always walk the balcony railing. It’s what they do. 2) While many things should be considered, sometimes teasing out the secondary effects can wind up with information overload when making a decision. You can wind up in analysis paralysis. Many of us are on the other end of the spectrum and give possible side effects too much sway when we should just pull the trigger and deal with issues as they pop up. 3) Have you looked into amazon and jet.com for… Read more »

Joe
Joe
4 years ago

Our cat used to walk on the railings too, but now she’s older and less bold. We are planning to move to a bigger place in the next few years and I’m dreading it. We’ll need more space as our kid get older, but there will be a lot of other changes too. The commute might be a little worse for Mrs. RB40. We’d get less sun light because we won’t live in a tower anymore. We’d have to do yard work… There are a bunch of stuff to consider and it’s information overload. We’ll probably just go for it… Read more »

Aaron
Aaron
4 years ago

A timely article JD! I’m considering taking a new job in Boston and trying to think through all of the consequences of that decision: the cost of living, the commute, the new position. I’ve only been there the one time, for the interview, so trying to read up on neighborhoods and look at the rent. I’ve even checked out Massachusetts state income tax! It can be a bit overwhelming, but I’m trying to minimize my blind spots. However, as you mentioned, that can be challenging. This was a great read as I make my decision.

Tina in NJ
Tina in NJ
4 years ago

When we bought our house 18 years ago, our son was in preschool near hubby’s work. We gave zero thought to school location. Turned out, the elementary school was a 5-minute walk away and the middle school a 10-minute walk. The younger kid is now a high school freshman and the high school is a 5-minute drive away. In three years, she’ll be driving herself! We couldn’t have planned it better! We did know that the house was halfway between my work and his and halfway between our parents, both important considerations for us.

Tucker
Tucker
4 years ago

This really speaks to me! When I went back to work after being a SAHM for years, I calculated as much as I could (travel time, daycare costs, work-related cloths, bus pass) when I decided to take contracts. You can see me go through this process here: http://workingundertime.com/the-tide-is-high-and-im-moving-on. Having said that, you can’t see 100% of all consequences of your decisions (I had a horrible Pho addiction at one contract!) but you can mitigate a lot of the big ones. Conversely, I have taken contracts that look bad on paper when I run my numbers but that I took a… Read more »

Mustard Seed Money
Mustard Seed Money
4 years ago

Where I work we have two main offices. The locations are about 30 minutes from each other. However with traffic it can sometimes take an hour to get from one office to the other. Many of my friends were originally located at the office in the East and bought places since this was the cool part of town to live in. In contrast I bought in the middle of both offices because I wasn’t sure when I would be required to work at one versus the other. Now a lot of friends from the East are being forced to work… Read more »

The Green Swan
The Green Swan
4 years ago

It’s clearly important when making big decisions like buying a house or car to think through the decision completely. While not all circumstances can be predicted, it’s reckless not to try and think give plus years down the toss and picture what the situation will be like then.

Houses especially since the transaction costs are so high, you don’t want to have to redo that decision shortly after!

Thanks for the good post!

beth
beth
4 years ago

I can’t imagine having a dog somewhere without a small outdoor area for taking care of business. I walk my dog every day but if I am sick or he has some middle of the night urgent need to go during a storm I just open the door to my small fenced yard.

I can’t imagine having to get dressed to walk the dog every time he wants to go out especially with winter coming.

Brittany
Brittany
4 years ago

I’m moving from Nashville TN to Roseburg OR in 9 days (!!!) and while we’ve prepared for some of the consequences, I’m sure others will come up we hadn’t even thought about. I’ll be making almost double the income in my new job, but OR does have a significant state income tax (TN has none) although OR doesn’t have a sales tax. I’ll live close enough that I can bike to work–we’ll see if I actually do; I hope so 🙂 I’m interested to see how the climate affects us, especially since we’re moving at the beginning of the rainy… Read more »

Andi Blackwell
Andi Blackwell
4 years ago

I think I may have the actual spreadsheet somewhere that we used to narrow your home choices. Would you like me to try to dig it out? Using houses to extrapolate, I think the biggest issue I see is that people don’t have a good ability to predict how secondary considerations will evolve. In my profession I find I say, “Are you sure?” way too often, and am generally met with, “Yeah, yeah, it will be fine.” “Okay, because that means …” and then insert consequence. It could be, that means that if you don’t want to send your child… Read more »

Shara G.
Shara G.
4 years ago
Reply to  Andi Blackwell

There’s also risk analysis. It’s amazing how a concept simple enough for most people understand is so rarely applied. If you do X you risk Y happening and subsequent consequences.

Full Time Finance
Full Time Finance
4 years ago

It is a fine juggling act between ensuring you’ve considered those secondary effects and creating analysis paralysis. When we purchased our first home we knew of the 25 minute commute to work and the neighborhood being slightly less optimal. We accepted that risk, only to find that the local municipality decided to enact a 10 year construction process on our main route to work shortly thereafter. This made 25 minutes 1.5 hours, which was not manageable. Ultimately it was not predictable that a once in a generation construction project would start in the middle of our commute. It was predictable… Read more »

zephyr haversack
zephyr haversack
4 years ago

Maybe this isn’t your thing, as you travel a lot, but when I was living in a high-rise and had a ton of sun, I planted veggies on the balcony in attractive containers — it was fun, plus I had great tomatoes, runner beans, etc. to eat. And yes, cats jump up on rails — they may be fine with it, but the owner, seeing this, might lose a few years of life from the shock.

Sue G
Sue G
4 years ago

Thanks for this article, J.D. Super important topic! The good news is, once you learn [sometimes hard lessons] about secondary effects, it becomes much easier to make them primary concerns the rest of your life. I’m actually astonished more people don’t think about things like commutes or other factors that effect quality of life. The years I spent saving for the down payment on my house, all I thought about was location, walkability, transportation to work and alternate shopping, etc. (Seriously, every move the last 15+ years I buy a paper map and mark bus routes, fire stations/ambulance dispatches =… Read more »

PatientWealth
PatientWealth
4 years ago

yes there is a road next to my house and there are some loud trucks that drive by at night or in the morning and it is such a hassle! I love our house and property but could do without that. I worked 20 minutes from here but recently changed job and now it is an hour commute one way. What a waste of time.

Tom Murin
Tom Murin
4 years ago

Great article. We could extend this thought process to so many aspects of our lives. Here in the NJ/NY area, the commute is significant – to say the least. My commute into the office is 2 hours (well, 1 hr 55 minutes) each way! Fortunately, the largest chunk of this is on a train and you can relax, read, sleep or work. Taking the 6:14 am train can get old (especially as you get older). But, don’t shed too many tears for me – I usually work from home and only have to go in 1 day a week…While I… Read more »

Julie @ Millennial Boss
Julie @ Millennial Boss
4 years ago

Wow that view from your place! Beautiful! We downsized this year from a 3000+ square foot house to a 600 sq ft apartment. We also sold a car so we are down to one car. I love that everything is in walking distance and that I’m not paying for the car. I hate that we don’t have space for our dog (sounds similar to your situation with your pets). I think our next move would be to rent out a place that has a fenced backyard so that he can run around. I feel so guilty that he is all… Read more »

Thehappyphilosopher
Thehappyphilosopher
4 years ago

Great thoughts JD. One thing I will add is that although most secondary effects are knowable, what is not known is how some of them will affect your life as you get older and move into different stages of life. This is felt most with big things like buying a house. As your life changes, the secondary effects change how they impact you. At some point it becomes really difficult to plan (although we should still try). Things that didn’t really mater to me 10 years ago are now important. When we moved to our current house we didn’t think… Read more »

Shara G.
Shara G.
4 years ago

Some friends of ours did this physically. When they built their house they pictured having mobility problems in 20 years and planned accordingly, with larger doorways that can accommodate wheel chairs and walkers, all necessary facilities available on the ground floor, and a front walk that has room to be modified for a ramp.

Amanda V
Amanda V
4 years ago

The Walmart near us delivers. The low prices more than make up for the small delivery charge.

chacha1
chacha1
4 years ago

Location was our primary concern. We moved into our apartment in fall of 2003. At the time, the rent was a nearly 30% increase from what we’d been paying, but within our means, and very reasonable for the (desirable) neighborhood and (unbeatable) square footage. Since then, rents in West L.A. have gotten so nuts that our rent (now 125% of what it was) is nearly 40% below market value. We chose the apartment for size and location. It’s on a side street with secure parking and secure entry. In a pinch, I could walk the two miles to work; when… Read more »

Katatonic
Katatonic
4 years ago

May I suggest a custom cat climbing & shelf system inside for them? Redditers are always posting amazing set-ups created for cats confined indoors. Satisfies your creative & construction urge and (hopefully) keeps the felines less interested in the deck railing. Full disclosure: I am an ardent advocate of indoor-only cats since losing beloved pets to coyotes & cars over the years.

PawPrint
PawPrint
4 years ago

We bought our townhome on the other side of town to be nearer our kids. We really don’t see them that often, however. While the place has a lot of great qualities, it’s farther away from our church, my friends, and my favorite coffee places. I thought I’d be happy gardening in pots, but I’d really prefer a small yard where I could plant flowers and some vegetables.

Pat
Pat
3 years ago

We moved out of a huge suburban house into a townhouse half the size in very walkable big city neighbourhood. We bought it at a pre-sale two years before it was built meaning we had only a rough idea of what it would look like and absolutely no idea of our neighbours. Turned out we were the only ones without kids under 18, and every school kid is learning a musical instrument! We didn’t know the nearby high school is famous for its baccalaureate music program! Also it is a popular complex with well-to-do new immigrants looking for a good… Read more »

ZJ Thorne
ZJ Thorne
3 years ago

I want to buy a place in the next year or two and my city is terribly expensive. There’s one neighborhood that is currently ill-served, but still served by public transportation. I’m looking there, but only at places that involve a shorter walk to the grocery store than I currently have. It is equally as convenient/inconvenient for both of my jobs, but I would save so much money on my mortgage that I could afford to take more cabs as necessary. I also am incredibly mindful that I don’t want a lot of space. Enough for me plus my girlfriend… Read more »

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