Success stories of NOT buying more/too much house

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nyinca
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Success stories of NOT buying more/too much house

Post by nyinca » Sun Jan 25, 2015 10:37 am

We are happy in our current home but I actively am trying to fight lifestyle creep. Sq footage is fine for current house with 2 kids and we have done nice reno to the house. Would ideally like more land but the houses we are looking at would be 2-3x the cost of our current house (which we can afford). Part of the reason we have not done it is I would like to spend more money on travel as my kids start get a little older. Also having a smaller mortgage means larger monthly cash flow for indexing/investing and less property taxes.

For those who resisted the urge, how did you do it, and how has it enhanced your life? I am not one to compete with the Jones but I do see most of my colleagues falling into this pattern.

jackholloway
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Re: Success stories of NOT buying more/too much house

Post by jackholloway » Sun Jan 25, 2015 11:14 am

When we bought, we priced such that we could afford the place - barely - on one income nd ramen. We did need help from a friend on the down payment, in the form of a second.

We paid off the second by funneling DW's take home to it. We then continued to pay as if we still had the original payment for the next 15 years.

This, plus a few raises for me, left us able to have her stay home with DD and move to part time, then unpaid volunteer. That would not have been possible if we had upgraded the house substantially.

We now have just 8 years to go, and just over half the original principle left at 3.25%. We will pay it off just as DD hits sophomore year in college, unless we hit such AMT that it is not worth it to keep it

fh2000
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Re: Success stories of NOT buying more/too much house

Post by fh2000 » Sun Jan 25, 2015 11:16 am

nyinca wrote:We are happy in our current home but I actively am trying to fight lifestyle creep. Sq footage is fine for current house with 2 kids and we have done nice reno to the house. Would ideally like more land but the houses we are looking at would be 2-3x the cost of our current house (which we can afford). Part of the reason we have not done it is I would like to spend more money on travel as my kids start get a little older. Also having a smaller mortgage means larger monthly cash flow for indexing/investing and less property taxes.

For those who resisted the urge, how did you do it, and how has it enhanced your life? I am not one to compete with the Jones but I do see most of my colleagues falling into this pattern.
Our primary is 1500 sf. At times, it felt small before our 2 kids left for college. Wife wanted to upgrade to 2500 ft during 2006-7. I resisted and we did not do it.

Our kids are now off to college. We are still working. But, 1500 sf now looks mostly empty. We can now just lock it and go for a travel. Good thing we did not upgrade. We might still have a large up-side-down mortgage now, instead of a paid off 1500 sf house.

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Toons
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Re: Success stories of NOT buying more/too much house

Post by Toons » Sun Jan 25, 2015 11:19 am

We asked ourselves , "How many empty rooms did we need to look at and take care of as we aged in our retirement years? :happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

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alec
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Re: Success stories of NOT buying more/too much house

Post by alec » Sun Jan 25, 2015 11:26 am

nyinca wrote:For those who resisted the urge, how did you do it, and how has it enhanced your life?
I'm fine with our small house, but I got used to sharing one bathroom when I was a kid, and also in the fraternity house. Every time my wife brings up the bigger house, we discuss what we have to do to be able to get a bigger house, and then she realizes what we have to do to get the bigger house. Since we had kids young, denying ourselves a bigger house was pretty easy (for me) since we were already used to denying ourselves a lot.

The small house allowed my wife to not work for 1.5 years to be able to get my kids straightened out in school/life. Middle school is hard. :beer Now that she's going to back to work, I'm making more than I did before, and the kids are mostly straightened out, we'll probably be able to more easily afford the (slightly) bigger house. We really only want another bathroom (we only have 1.5 now) and possibly another bedroom, so I imagine we'll probably get a slightly bigger house when my youngest is in middle school.

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Re: Success stories of NOT buying more/too much house

Post by beyou » Sun Jan 25, 2015 11:34 am

When your kids move on to college etc, and it's just two of you,
there is your reward, no need to move when you retire (at least not to downsize).
And there are many more ways you save than just the cost of the larger house :

1) Lower utility bills (heat and electric)

2) Less furniture/carpeting/rooms to paint etc over the years.

3) Lower taxes

4) Lower estimates by contractors who size you up and quote what they think you can afford.

5) Lower cost of landscaping a small property

The real success is if you use all that savings for something productive.

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Re: Success stories of NOT buying more/too much house

Post by stan1 » Sun Jan 25, 2015 11:35 am

Bought a house equal to about 2.5 times annual income in 1999 in a HCOL area. One of us retired in 2008. We paid off the mortgage in 2013. Now we fly business class when we fly on 10+ hour flights two or three times each year (only when tickets are bought on sale, can get business class tickets at more than 50% off standard rates if you watch for sales and have a little flexibility like travelling to Europe during winter months).

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Re: Success stories of NOT buying more/too much house

Post by dbCooperAir » Sun Jan 25, 2015 11:36 am

Our house is small @ about 1300 sq ft, one bath, 2 kids, a few acres. We were going to move around 2005-06. I drew up the plans and got as far a bidding it out. I felt the pricing at the time was out of wack or maybe I'm just too cheap. The kids are just about college bound now and I have 0 regrets keeping with our place, it worked out well. I do still want to move but the house will be about the size with a better layout.

As our kids got older they got more involved with sports, band, church, etc. We did not see much of our house for 10 years, again the current house is was just fine.

I think its been good for the kids, does not feel we were trying to keep up with the Jones's when family and friends were all upgrading, I did not think of this at the time it just worked out that way.
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Re: Success stories of NOT buying more/too much house

Post by Postmon » Sun Jan 25, 2015 11:37 am

I look at a house as somewhat of a risky asset as I had to sell a home when prices tanked in the early-90's and no one was buying. I was not sleeping well then. When the housing market is doing well, it's just like the stocks -- it's human nature to want more. But when things will turn around at some point, you may feel a lot better that you played it safe. Kind of like staying in your 60/40 portfolio in a bull market and resisting the temptation to up your equities to 80/20. :wink:

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stemikger
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Re: Success stories of NOT buying more/too much house

Post by stemikger » Sun Jan 25, 2015 12:13 pm

nyinca wrote:We are happy in our current home but I actively am trying to fight lifestyle creep. Sq footage is fine for current house with 2 kids and we have done nice reno to the house. Would ideally like more land but the houses we are looking at would be 2-3x the cost of our current house (which we can afford). Part of the reason we have not done it is I would like to spend more money on travel as my kids start get a little older. Also having a smaller mortgage means larger monthly cash flow for indexing/investing and less property taxes.

For those who resisted the urge, how did you do it, and how has it enhanced your life? I am not one to compete with the Jones but I do see most of my colleagues falling into this pattern.
All my friends and family fell into this trap. It seems to be the normal progression, I'm so glad I didn't. In 2008 most of my friends and family lost their jobs and a few of them lost their houses. I on the other hand was a lot more secure with my low mortgage that I would have been able to pay on unemployment. I now have no mortgage and feel I can deal with the unexpected financial set back.

When it comes to success stories, Warren Buffett has been asked why he doesn't have a house that many billionaires have and his standard answer is that he's happy there and he's cool in the summer and warm in the winter.

My daughter who is now 20 always says how much she loves her house. It's not the biggest or most fancy but was always filled with love.

I know a lot of people who went the McMansion route and unfortunately many of them are not happy. I'm not sure if it is because of the financial stress or misplaced values. As Sally Field's character said in Forest Gump. People need enough money to live life and the rest is just for showing off.
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Re: Success stories of NOT buying more/too much house

Post by Ninegrams » Sun Jan 25, 2015 1:06 pm

The wife and I have an 1100 sq. foot house( on a large lot ) which is more than adequate for the two of us. It's cozy and personal without feeling cramped. The secret is we keep the "stuff" to a relative minimum, and organize what there is. I love the feeling of space, and the ease of finding what I need. It's easier to maintain, and costs less to heat/cool. I've built a workshop in the yard for woodworking, and converted part of the garage to a "man cave". It works quite well.

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Re: Success stories of NOT buying more/too much house

Post by SDBoggled » Sun Jan 25, 2015 1:07 pm

High cost of living area, relatively great school district - it was "all we could afford". Started with 1200 sq ft, no garage: 3 kids and office in 3 bedrooms meant 2 youngest were in only living room for a year.
Slowly used bonuses, savings to: increase to ~1800 sq ft and garage (2 youngest still shared); then renovations of bathrooms, kitchens, floors, landscaping... until comfortable but definitely not luxury.
Most Kids' friends had bigger houses, some had smaller apartments. However, our Kid focussed living areas coped with frequent ~5-7 extra sleeping over "camping" style, so it was "big enough".

Instead of increasing primary, added taxable and... far more square footage in rentals which hopefully is sufficient to provide the basis for a comfortable retirement. Happy with choice. However, another option that I didn't properly consider would have been to keep moving and fixing... up to $500k tax free gain every two years - might be a decent ROI reason to buy more house than you "need".

"Why don't we have 2 storey house, are we poor?": led to some discussions what is really poor, relative incomes and about house size choices and when younger they mostly understood the tradeoffs (definitely do now).

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Re: Success stories of NOT buying more/too much house

Post by prudent » Sun Jan 25, 2015 1:20 pm

Our "starter home" was 1200 sq. ft. Much pressure from friends and family to move up after some years. I was too afraid of having a mortgage that required both incomes so I dragged my feet. About 15 years in, my wife's job situation deteriorated and for her own mental health I encouraged her to quit. She did and turned to doing volunteer work which she loves. At that point I figured why even move? Paid it off at the 22 year mark. We love how being debt-free has goosed our savings and made ER a possibility rather than an unachievable dream.

Looking back at the times when we considered moving up, I realize all it would have done was make it possible to have more "stuff". We don't regret it at all. The friends who did move up and encouraged us to do the same are doing OK but they are looking at mortgage payments well past retirement age, and they aren't real happy about that. Of course they can downsize to mitigate it, but it is something they would have to do, not want to do.

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Re: Success stories of NOT buying more/too much house

Post by Texas hold em71 » Sun Jan 25, 2015 1:58 pm

Where to start? Just realtor fees on selling the one I have always seemed like a waste of good money.

- ability to pay off mortgage at an early age; not for everyone but helps me sleep
- we can remodel and buy new furniture to our hearts' content keeping this place fresh
- more cash flow for investing for an early retirement
- more cash flow for consumption items- electronics, travel, etc.
- current house is in a price range that is a lot easier to sell in a tough market
- I live in a high property tax state so I save on taxes staying in this house
- smaller house means lower utilities too
- Once the kids leave, this place will seem huge

Beth*
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Re: Success stories of NOT buying more/too much house

Post by Beth* » Sun Jan 25, 2015 2:26 pm

We bought our current house about 17 years ago with a mortgage that was significantly below what we could have qualified for. I've been wondering lately if that was the right decision.

Plusses: We were never house poor. We were able to save a lot of money in retirement accounts, send our kids through college without them having to take out loans, and live a very nice lifestyle. We are in excellent financial shape today and the house is paid off. Knowing that I don't have a mortgage gives me a lot of peace of mind.

Minuses: In the area where I live, houses in more expensive neighborhoods have appreciated much more than houses in my neighborhood. I paid $290,000 for my house about 17 years ago (we are in a high cost of living area) and it is probably worth about $500,000 to $550,000 today. We have put approximately $100,000 into the house over the years (new bathrooms, new kitchen, etc.) so we have made perhaps $150,000 in gains on the value of the house. If I had bought a house for $350,000 or $400,000 in some more expensive neighborhoods in my metropolitan area 17 years ago, that house would easily be worth $1 million today.

Then there are all the harder to measure factors. If we lived in a more expensive neighborhood, would we have felt obligated to drive nicer cars, would our kids have pressured us for more material possessions, etc.? There is a lot of evidence that people who live in wealthier neighborhoods feel pressured to spend more money keeping up appearances. I don't live in a poor neighborhood, we are talking houses worth half a million dollars, but my neighbors tend to be government employees, college professors, and other salaried professionals, not tech executives and corporate lawyers.

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Re: Success stories of NOT buying more/too much house

Post by jstrazzere » Sun Jan 25, 2015 2:35 pm

nyinca wrote:For those who resisted the urge, how did you do it, and how has it enhanced your life? I am not one to compete with the Jones but I do see most of my colleagues falling into this pattern.
The way we avoided lifestyle creep was to have clear, shared plans for the future, and learning to be happy with what we have rather than envious of those with more. We learned early on to clearly distinguish what we *needed* from what we *wanted*. While we occasionally spent on wants, we did so with our eyes open, and didn't pretend that it was a need.

Once you start competing with the Joneses, you'll always find others that spend more extravagantly - the Smiths, the Does, etc, etc. Creeping could easily become a habit.

I too had lots of friends that took that path. One good friend became vastly house-poor by purchasing a McMansion at the top of what the real estate agent indicated they could afford - just before his wife unexpectedly got pregnant and left the job market. They ended up declaring bankruptcy and getting divorced. Neither has ever recovered financially. Very, very sad.

I have other friends who always felt they would never get ahead anyway, so never bothered saving any money they got. They were living a self-fulfilling prophecy.

I'm so lucky that my wife and I share a common outlook toward work, money, and most other aspects of life.

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Re: Success stories of NOT buying more/too much house

Post by TravelerMSY » Sun Jan 25, 2015 3:26 pm

It's a little easier to fight the McMansion urges when you don't have children. You need less house and can be indifferent to stuff like school zoning, Although I'm a little embarrassed that my partner and I live in 2000sf when we could technically get by with a lot less. We chose more by neighborhood than by size, and that size was what is available,

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stemikger
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Re: Success stories of NOT buying more/too much house

Post by stemikger » Sun Jan 25, 2015 3:58 pm

Beth* wrote:Then there are all the harder to measure factors. If we lived in a more expensive neighborhood, would we have felt obligated to drive nicer cars, would our kids have pressured us for more material possessions, etc.? There is a lot of evidence that people who live in wealthier neighborhoods feel pressured to spend more money keeping up appearances. I don't live in a poor neighborhood, we are talking houses worth half a million dollars, but my neighbors tend to be government employees, college professors, and other salaried professionals, not tech executives and corporate lawyers.
So true. I witnessed this first hand years ago. My sister-in-law and my ex brother-in-law (who was and is a real jerk) bought a big mansion in a very exclusive area in New Jersey. When they were moving some stuff from the old house to the new house, it was extremely important to him that my sister-in-law drive the Mercedes instead of the Toyota Corolla to the new digs. She was just as big of a jerky back then and agreed. They divorced years ago and lo and behold she is kind of a nice person. I guess her new guy who is a good guy is rubbing off on her.

I personally would never want to live in an area where the competition to look rich is so important.

P.S. The original guy ended up in prison for 10 years. He was involved in a pump and dump scam that he was running for some pretty bad guys. It was his third time in the slammer. Go figure.
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Re: Success stories of NOT buying more/too much house

Post by HIinvestor » Sun Jan 25, 2015 4:40 pm

I'd think about and talk to some "empty nesters" about what they're doing with the spare bedrooms now that their kids have moved out to help think about what YOU want your lives to be like once your kids have moved out to college, careers, or their own lives elsewhere. I have many relatives who have 1000s of square feet of emptiness that they have to clean. That was not something H or I wanted. We kept our small 3 bedroom, 2 bath place, that is just right for when the kids come down to visit but fine with just H & I as well. I feel sorry for folks who are rattling around in their huge homes, having to clean them and pay for all that extra space. I personally much rather travel and dine out and have our cozy little place that is just big enough.

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Re: Success stories of NOT buying more/too much house

Post by Carefreeap » Sun Jan 25, 2015 5:03 pm

We were already over-housed in a 2500 sq.ft. home in the SF Bay Area when we chose to accept my husband's employer's offer to relocate to the Scottsdale AZ area in 2003. I didn't want to sell the SF Bay Area house so not having a huge amount of cash did limit how big of a house we bought. We still wound up with a bigger house at 2900 sq.ft. but still have only 3 bedrooms and it's all on one level. Compared to some of the surrounding houses we are the poor dog in a rich neighborhood. :wink:

Really glad we didn't go over the top. We watched the prices peak in 2007 and by 2008 the company and the real estate market went into free fall. Because we structured our mortgage correctly (I was pretty sure we were going to have one more move before retirement and would need to rent out the house) we were able to take advantage of an opportunity to move to company headquarters in Germany in 2009. Most of DH's colleagues wound up unemployed for a while doing short sales of their homes and relocating out of state. They are now in round two of the same situation and unemployed again. At least the economy is doing better but DH is grateful that he was in a financial situation where he could retire instead of being laid off. It's a lot tougher to get replacement work as a 50+ old IT executive or Sr. Manager.

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Re: Success stories of NOT buying more/too much house

Post by Impromptu » Sun Jan 25, 2015 5:12 pm

Midwest, just starting out at my first job 1.5 years ago, I bought a small, 100 year old house 2 blocks from my work. 3 bedrooms, 1600 square feet. I built a 3 car garage. I am married. Our 1st child due in a week. Cost of the house was 1/2 my annual salary.

Benefits will be not having to decide between paying the mortgage or saving for retirement. We live in one of the highest property tax areas in the country, so this saves a ton of money on taxes. I walk to work, so we only need 1 car. We will have the house and our student loans paid off by the end of this year. At that point we will have freedom to use our money for anything we want, like vacations, fancy foods, or save for early retirement. If we outgrow this house (possibly happen with 3-4 children), then we'll have more options open to us for a bigger house.

Part of the success is that we live in the midwest. I looked at similar homes near my brother in the South Bay Area in California and found that this house would cost $1.2 Million there. My financial life would have been much different. My wife and I are very happy with our choice.
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nyinca
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Re: Success stories of NOT buying more/too much house

Post by nyinca » Sun Jan 25, 2015 5:53 pm

Thanks for all of the great replies. We live in a high cost of living area and the property taxes alone on a larger property are a huge turnoff.

I am blessed to have a spouse who is on the same page regarding not letting the mortgage limit your freedom to do other things. Kids are still young but the house is big enough for them to grow into. We are hoping that the freedom of having an easy to handle mortgage will allow us to work less and invest more time into them and ourselves.

My spouse's sibling is not on the same page as we are and him and his wife have already gotten themselves into a home at the upper limit of what they can afford (they believed what the realtor told them about what they can afford). Time will tell if it works out for them.

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Re: Success stories of NOT buying more/too much house

Post by Dandy » Sun Jan 25, 2015 7:28 pm

I have a modest 3 bedroom ranch in a nice neighborhood since 1974. As the sole breadwinner with two children I was careful about extending ourselves. When the kids were in their early teens I was able to pay off the mortgage. With college not to far away I resisted the urge to sell and buy "better". I guess the success is that kids graduated from college with no debts for them or us. I probably have more invested assets vs more house assets.

I was glad when I took a package at age 60 in 2008 that I didn't have a mortgage or larger and pretty empty house and had more invested assets. So who knows what having a "better" house would have been like? I'm happy with the decision. The house was a bit more than a starter home and now I don't have to downsize with an empty nest.

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Re: Success stories of NOT buying more/too much house

Post by poker27 » Sun Jan 25, 2015 7:40 pm

I'm about 2.5 years into my first home ownership.

Worst case at the time the home was 2.7 x my salary.

Best case, counting my long term GFs salary (now fiance) the home was 2 ish x our salary. I think after you purchase your house, if part of you wishes you bought a bit more, and the other part of you wishes you bought a bit less, you bought just right. Now excuse me as I go change the pot for my leaking roof :)

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Re: Success stories of NOT buying more/too much house

Post by cherijoh » Sun Jan 25, 2015 8:35 pm

blevine wrote:When your kids move on to college etc, and it's just two of you,
there is your reward, no need to move when you retire (at least not to downsize).
And there are many more ways you save than just the cost of the larger house :

1) Lower utility bills (heat and electric)

2) Less furniture/carpeting/rooms to paint etc over the years.

3) Lower taxes

4) Lower estimates by contractors who size you up and quote what they think you can afford.

5) Lower cost of landscaping a small property

The real success is if you use all that savings for something productive.
Let me add one more to this list - your house will be more affordable when it comes time to sell and there will be more qualified buyers.

I have a 1-story house with just under 1400 sq. ft. -- it is the smallest floor plan in the neighborhood. A neighbor one block over with the same floor plan just sold her house in 5 days and got 99.5% of the list price. (This was 3% higher than the Zillow value, so it wasn't a fire sale by any means). Other larger houses in the neighborhood have languished on the market for over 60 days. (I'm not certain they were competitively priced, but I still think this illustrates my point about affordability). In 2008-09, the smaller homes in the neighborhood were the only ones that were moving.

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Re: Success stories of NOT buying more/too much house

Post by vveat » Sun Jan 25, 2015 8:38 pm

We've been 10 years in our house, originally we bought it as a moderate size fixer upper to fix and move on in a couple of years. But we surprised ourselves and stayed put (not from lack of means, by choice). How we do it:
- By thinking of how much effort and thought went into renovating and customizing things - and how we'll never do the same nowadays with kids in tow
- By loving the location
- By reminding ourselves how much hassle moving houses is
- By living in a smaller footprint than the house allows, e.g. having our kids share a bedroom, and keeping a spare guest room
- By 2015 end we'll add the enjoyment of living without a mortgage :sharebeer

Our test will come in 5-6 years, when very likely we would have brought my aging mother to live with us (taking the guest room) and we'll have 2 teenagers of different gender in one bedroom (probably will need to split them then). So moving may still be in our future, though I hope we'll find a way around it.

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Re: Success stories of NOT buying more/too much house

Post by Gill » Sun Jan 25, 2015 8:41 pm

Aren't you all a little cramped? My wife and I enjoy rattling around our 4,250 sq. ft. house, and so do our two cats...
Gill
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Re: Success stories of NOT buying more/too much house

Post by alec » Sun Jan 25, 2015 8:48 pm

Gill wrote:Aren't you all a little cramped? My wife and I enjoy rattling around our 4,250 sq. ft. house, and so do our two cats...
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When I feel cramped, I go outside. :mrgreen:
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Re: Success stories of NOT buying more/too much house

Post by ERMD » Sun Jan 25, 2015 11:01 pm

stemikger wrote:
nyinca wrote:W
When it comes to success stories, Warren Buffett has been asked why he doesn't have a house that many billionaires have and his standard answer is that he's happy there and he's cool in the summer and warm in the winter.
good point.. Buffett is just about the best example you can cite for this thread. he's worth 68 billion dollars and his omaha property is a grand total of 6000 sq feet. the home itself couldn't be more than 2500.
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Re: Success stories of NOT buying more/too much house

Post by Carefreeap » Sun Jan 25, 2015 11:12 pm

ERMD wrote:
stemikger wrote:
nyinca wrote:W
When it comes to success stories, Warren Buffett has been asked why he doesn't have a house that many billionaires have and his standard answer is that he's happy there and he's cool in the summer and warm in the winter.
good point.. Buffett is just about the best example you can cite for this thread. he's worth 68 billion dollars and his omaha property is a grand total of 6000 sq feet. the home itself couldn't be more than 2500.
LOL the house is over 6000 sq.ft! Believe me it does look a little odd in the neighborhood.

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Re: Success stories of NOT buying more/too much house

Post by danwhite77 » Sun Jan 25, 2015 11:21 pm

I guess I'll be a little bit braggy here, with apologies in advance because my wife and I are kind of the poster children for not caring about the Joneses.

We have four kids, so there are six of us total. In 2012 we bought a five bedroom house for 450k in cash (2000 square feet above grade). With the amount of down payment we could have made (~500k), plus what a bank would have lent to us, we could have bought anything from ~1 million to ~1.5 million. In our area, that buys pretty much the 'nicest' homes in town. Instead we bought our home in the least desirable part of our little town.

So why didn't we try to wow our neighbors? Two primary reasons. First, my wife and I (independent of each other) grew up around a lot of wealthy families that were into ostentatious displays of wealth. Based on our experience, that wealth usually had a deleterious effect on the kids of the families (the kids were our friends and contemporaries). Not always, but oftentimes the kids surrounded by the trappings of wealth (like a big house) considered that wealth a sort of hammock and didn't put forth a lot of effort into their endeavors (there were exceptions of course). If our kids want the big, "nice" house they can work hard and earn those dollars and do it themselves. I don't want them thinking an inheritance is in the offing.

Second, not having a mortgage really brings peace of mind. Had we taken out a mortgage we would've enjoyed a bull run on the excess cash during 2012 and especially 2013. But that doesn't concern me now. As we sit here, presumably getting closer to a downturn of some degree of severity, I have a psychological cushion. That cushion is that, no matter what happens in the markets tomorrow -- everything could go to zero -- no bank will ever foreclose on our home because we didn't borrow a penny to buy it. The same is true if I lose my job tomorrow, a bank will not foreclose.

I recommend staying away from the hedonic treadmill http://en.wikipedia.org/wiki/Hedonic_treadmill -- the Joneses of the world. Be confident in your ability to stay happy regardless of your surroundings, however modest, and I'm sure that you can do it!
"While some mutual fund founders chose to make billions, he chose to make a difference." - Dedication to Jack Bogle in 'The Bogleheads' Guide to Investing'.

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danwhite77
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Re: Success stories of NOT buying more/too much house

Post by danwhite77 » Sun Jan 25, 2015 11:25 pm

Carefreeap wrote:
ERMD wrote:
stemikger wrote:
nyinca wrote:When it comes to success stories, Warren Buffett has been asked why he doesn't have a house that many billionaires have and his standard answer is that he's happy there and he's cool in the summer and warm in the winter.
good point.. Buffett is just about the best example you can cite for this thread. he's worth 68 billion dollars and his omaha property is a grand total of 6000 sq feet. the home itself couldn't be more than 2500.
LOL the house is over 6000 sq.ft! Believe me it does look a little odd in the neighborhood.
I am friends with people in his neighborhood. He lives in a completely nondescript house compared to other billionaires, it's the same place he bought in the fifties (with minor additions).

On the one hand, here's Warren's house:

http://cdn-ugc.cafemom.com/gen/min/200/ ... 01azzo.jpg

And on the other hand, here's Bill Gates's compound:

http://www.idesignarch.com/wp-content/u ... ouse_1.jpg

And Larry Ellison's compound:

http://hauteliving.com/wp-content/uploa ... ison06.jpg

I think Warren's fits just fine in Omaha.

Edit: Gates and Ellison have "compounds" not "houses."
"While some mutual fund founders chose to make billions, he chose to make a difference." - Dedication to Jack Bogle in 'The Bogleheads' Guide to Investing'.

Carefreeap
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Re: Success stories of NOT buying more/too much house

Post by Carefreeap » Sun Jan 25, 2015 11:58 pm

I've driven by. It's a BIG house for the neighborhood.

RunningRad
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Re: Success stories of NOT buying more/too much house

Post by RunningRad » Mon Jan 26, 2015 12:12 am

Been there, done that.

Agreed to my wife's proposal over a glass of wine to buy big upgrade and then went back on decision and stayed put. Instead, did some remodeling and paid off current home which is more than adequate. Best financial decision I ever made. Miss not having adequate guest rooms for holiday visitors, but we make do. It would be nice to have a better patio and outdoor entertaining setup for the five days per year that we might want to hang out in the backyard.

I do not miss the big mortgage payment, and not having one has put me in the driver seat to retire in early 50's.
Few decisions in life motivated by greed ever have happy outcomes--Peter Bernstein, The 60/40 Solution

staythecourse
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Re: Success stories of NOT buying more/too much house

Post by staythecourse » Mon Jan 26, 2015 12:35 am

RunningRad wrote:Been there, done that.

Agreed to my wife's proposal over a glass of wine to buy big upgrade and then went back on decision and stayed put. Instead, did some remodeling and paid off current home which is more than adequate. Best financial decision I ever made. Miss not having adequate guest rooms for holiday visitors, but we make do. It would be nice to have a better patio and outdoor entertaining setup for the five days per year that we might want to hang out in the backyard.

I do not miss the big mortgage payment, and not having one has put me in the driver seat to retire in early 50's.
Agreed. We easily can afford a much bigger house then we have, but every time we discuss why it comes down to an advantage for only a few days a year (guests staying with us or wanting more of a backyard on a nice summer day). Have a hard time justifying it.

Now that we had a first child in this house it will be hard emotionally to leave it unless we really do need more space, but am sure we will figure out how to find more space, i.e. throwing away more stuff!!

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

dolphinsaremammals
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Re: Success stories of NOT buying more/too much house

Post by dolphinsaremammals » Mon Jan 26, 2015 5:09 am

Beth* wrote: Minuses: In the area where I live, houses in more expensive neighborhoods have appreciated much more than houses in my neighborhood. I paid $290,000 for my house about 17 years ago (we are in a high cost of living area) and it is probably worth about $500,000 to $550,000 today. We have put approximately $100,000 into the house over the years (new bathrooms, new kitchen, etc.) so we have made perhaps $150,000 in gains on the value of the house. If I had bought a house for $350,000 or $400,000 in some more expensive neighborhoods in my metropolitan area 17 years ago, that house would easily be worth $1 million today.

...my neighbors tend to be government employees, college professors, and other salaried professionals, not tech executives and corporate lawyers.
$290,000 + $100,000 = $390,000 cost
sell for $525,000
profit $135,000

$375,000 cost
sell for $1,000,000, taxable amount $1 mil - ($375,000 +$500,000) = $125,000, tax rate is 20%??, lost to taxes $25,000
profit $600,000

I am wondering how much the real estate transaction fees, and over seventeen years extra mortgage interest, utility bills, insurance, property taxes on the more expensive house would have cost you.

I would open my wrists before I lived surrounded by tech executives and corporate lawyers :D as opposed to college professors and the like.

Flashes1
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Re: Success stories of NOT buying more/too much house

Post by Flashes1 » Mon Jan 26, 2015 8:19 am

We did the opposite....we ugraded to a custom-built house when we had kids so it would be more "family friendly." It's the best investment we've made....here's what we got:

* Wooded back yard----great for kids to play in----can't see neighbors in the summer. I wanted kids to grow up around big trees.
* Putting green: family took golf away from me---so I brought golf course to me.
* Hot Tub: whole family loves it....we built a spot just for it in the back yard with privacy landscaping.
* Gas Fire Pit: fun for the family to roast marshmallows in the fall.
* Wood Burning Fireplace---indoor: we love having fires in the winter.
* Dedicated Home Theater: where I escape after putting kids to bed----acoustics rivals real theaters.....see avsforums.com
* Dedicated Video Gaming Room: where the kids play X-box----double 5/8" drywall with green glue between.....no sound comes out of it.
* Exercise Room: 1/2" rubber flooring---feels like I'm at Lifetime----great place to train my little 7 yr old boy before he gets to play X-Box.
* Whole House Sonos Player---fun to crank up the music using my cell phone.
* Wolf stove: boils water in no time----looks cool.
* Mud Room: extremely useful for kids---love having a bench to sit on to put my shoes on in the morning---plenty of hooks for kids' jackets.
* 3 car garage: love the extra space for bikes, etc. No more squeezing out of my car.

LOVE the new house. Should be paid off in 10 years. I've seen pictures of John Bogle's house----his makes mine look like a shack---but he makes just a little bit more $ than me. :)

camptalcott
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Re: Success stories of NOT buying more/too much house

Post by camptalcott » Mon Jan 26, 2015 8:44 am

So can't really say I see a lot of my friends and collegues falling into this "trap".

We brought new construction for our prior house, we based our decisions solely on what we could comfortably afford. LOL. The house we raised our kids in was about 3,000 sq ft on about a 1/4 acre. I definitely didn't feel that it was too big. lol but I'm probably a space hog. the more space I have the more I seem to clutter up, that's definitely how I go with pocketbooks. :D

Anyhoo, I recently downsized to a center city townhome. I am a recent widow and I simply got tired of spending all my free time maintaining a house.

so I guess I should ask what do you mean by "too much" house? My single family house became "too much" because my kids are away at college and my dh is deceased but I don't regret buying it.
"He who dies with the most toys is still, nonetheless dead"

flyingaway
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Re: Success stories of NOT buying more/too much house

Post by flyingaway » Mon Jan 26, 2015 9:08 am

This is a tricky question. As the previous person pointed out, too much housing at some time may not be too much at a different time. When my two sons are small, a 6br house looks OK. When they are out of the house, it looks too much.

There is also some peer pressure when buying a house. If all your friends (with similar income and professional backgrounds) have big houses, you have to have a big house, otherwise you will not be in that circle of friends. I do not think this is "keeping up with the Jones". It is "keeping up with your standards of living".

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pennstater2005
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Re: Success stories of NOT buying more/too much house

Post by pennstater2005 » Mon Jan 26, 2015 9:09 am

I consider myself lucky. I found a small cape cod with 3 bedrooms and 2 full baths and half an acre (double lot) in a neighborhood where most homes are 2 and 1. It has a mortgage we can afford on one salary if needed. Sometimes the rooms feel small but when the utility bills come it's worth it. It's not that small :D
“If you think nobody cares if you're alive, try missing a couple of car payments.” – Earl Wilson

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Re: Success stories of NOT buying more/too much house

Post by dolphinsaremammals » Mon Jan 26, 2015 12:03 pm

flyingaway wrote: There is also some peer pressure when buying a house. If all your friends (with similar income and professional backgrounds) have big houses, you have to have a big house, otherwise you will not be in that circle of friends. I do not think this is "keeping up with the Jones". It is "keeping up with your standards of living".
I don't think those people are called friends. Acquaintances maybe.

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Watty
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Re: Success stories of NOT buying more/too much house

Post by Watty » Mon Jan 26, 2015 12:09 pm

nyinca wrote: how did you do it,
Getting a house with an unfinished basement really helps make a smaller house work well.

In our neighborhood I would guess that only about half the houses have basements. The price difference in the houses is in the ballpark of ten to fifteen thousand dollars because of the basement but the ones with basements are so much more functional that there is less reason to move up to a larger house.

If you will rarely be using a formal living or dining room then getting a house without those also makes sense.

anonforthis
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Re: Success stories of NOT buying more/too much house

Post by anonforthis » Mon Jan 26, 2015 12:20 pm

We bought too much house. I don't care for it but my husband likes/loves it. Happy husband happy life!

leonard
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Re: Success stories of NOT buying more/too much house

Post by leonard » Mon Jan 26, 2015 12:24 pm

I don't understand, why would anyone have an URGE to upgrade houses and experience the following:

1. Moving Non-financial costs. Moves are a huge time sink. They are extremely stressful. You refocus your entire life for several months. There is a huge cost in productivity working and in your personal life. Work to "fix up" the old house. Work to get the new house up to your standards.
2. House flipping Financial costs. If you move every 5-7 years - you experience a lot of transactions costs. You experience potential pricing risks each time you sell.
3. Write a larger and larger check each month every time you upgrade.
4. Extend the final pay off of your mortgage further and further in to the future.

Why exactly would someone have any Urges to do this? If anything, all of the above outlined problems should cause one to have an urge NOT to flip their housing.
Leonard | | Market Timing: Do you seriously think you can predict the future? What else do the voices tell you? | | If employees weren't taking jobs with bad 401k's, bad 401k's wouldn't exist.

poker27
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Re: Success stories of NOT buying more/too much house

Post by poker27 » Mon Jan 26, 2015 12:41 pm

Watty wrote:
nyinca wrote: how did you do it,
Getting a house with an unfinished basement really helps make a smaller house work well.

In our neighborhood I would guess that only about half the houses have basements. The price difference in the houses is in the ballpark of ten to fifteen thousand dollars because of the basement but the ones with basements are so much more functional that there is less reason to move up to a larger house.

If you will rarely be using a formal living or dining room then getting a house without those also makes sense.

As a kid I always wanted a basement. I had friends with 'cool' basements with pool tables, big TVs, and bars we would hang out in. Now as an adult, a basement sounds like a bit of a headache. I'm working in my first floor bedroom with a space heater, and I'm still freezing. + Worrying about flooding and the like makes it less of a slam dunk for me

flyingaway
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Re: Success stories of NOT buying more/too much house

Post by flyingaway » Mon Jan 26, 2015 12:52 pm

dolphinsaremammals wrote:
flyingaway wrote: There is also some peer pressure when buying a house. If all your friends (with similar income and professional backgrounds) have big houses, you have to have a big house, otherwise you will not be in that circle of friends. I do not think this is "keeping up with the Jones". It is "keeping up with your standards of living".
I don't think those people are called friends. Acquaintances maybe.
When the kids are young, we usually befriend families with kids at similar ages, so that when kids are playing together, the parents can play together.

I live in a middle-sized city where the major employer is a state university. Many of my friends are employed by the university or some local tech companies, none of them are in the same department. My friends usually have double incomes, highly educated, kids. They will have similar sized houses and live in similar neighborhoods.

bungalow10
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Re: Success stories of NOT buying more/too much house

Post by bungalow10 » Mon Jan 26, 2015 12:57 pm

Beth* wrote:If I had bought a house for $350,000 or $400,000 in some more expensive neighborhoods in my metropolitan area 17 years ago, that house would easily be worth $1 million today.
Right, but the cost of those upgrades would have scaled up, as would insurance, taxes, interest....

Don't assume the sticker price increase means more money in your pocket.
An elephant for a dime is only a good deal if you need an elephant and have a dime.

Lindrobe
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Re: Success stories of NOT buying more/too much house

Post by Lindrobe » Mon Jan 26, 2015 1:02 pm

My husband and I live in a modest 1500/sq foot house that we bought when our combined income was about $70k. Our combined income is now about $200k and we resist the urge to buy a more expensive house by thinking of the following:

1. The house we live in now will be paid off in 4 years (I will be 36 years old)
2. We currently live on pretty much no budget at all. We can go on the vacations that we want, drive whatever vehicles we want, and pretty much buy whatever we want (within reason). We also save a significant amount of our extra income. A larger, more expensive house may mean living on some type of budget and that does not sound appealing to us.

:)

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Hub
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Re: Success stories of NOT buying more/too much house

Post by Hub » Mon Jan 26, 2015 1:24 pm

My wife and I still live in the same home we bought 9 years ago in our 20's. She is quitting work next month to stay home with the kids for a couple years. It's 2000 square feet and 4 bedrooms so plenty of room. We almost upgraded about 3 different times, but resisted each. There is zero chance she could have quit her job had we pulled the trigger on any of those three. Also we saved in excess of 50% of our income over the past couple years with both working. Again, that could never have happened with a home upgrade like every last one of our friends and co-workers have chosen to do. Thanks to this savings rate we're on pace for financial independence in our early 40's.

All that said, we still don't know exactly what we're going to do when elementary school rolls around in a couple years.

montanagirl
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Re: Success stories of NOT buying more/too much house

Post by montanagirl » Mon Jan 26, 2015 1:48 pm

Yeah I regret it. It's a 1200/1200 split ranch, and most of the stuff downstairs is a hassle to care for. I really wanted something smaller on one level, but 2002 inventory was really low here and we had a kid coming to live with us. Within a couple years building went crazy and there was a lot more to choose from, but it was too late.

At least we spent only 160k and not the 250k we could have easily got into. DH would have been more impressed with a place like that, but we would have been in a precarious situation in the recession that followed.

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