Credit Cards and Consumer Debt
Re: [Million Dollar House]

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By mlk58
October 3, 2006

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We are living now in a house that is about 2500 square feet and I am unhappy in it (I just keep thinking about all the money we are saving by renting this and that makes it worth it). Even if it was just DH and I, I realized that I would not be happy with a house this size.

DM, I want to start out by saying I'm not in any way trying to be mean or negative or snarky. But I've been reading your posts for a few months now, and I'm still really puzzled about how you're going to be able to start from zero and build this big house AND get your retirements funded AND pay off all that debt, based on what you've told us about your income and assets.

I'm a bit younger than you, my DH and I have a combined income a bit larger than what you say your combined income is, and we have significantly larger retirement savings than you say you do. We only have one child and we live in a house in which I have no doubt you would be completely miserable -- 3 bedrooms, 2 baths, 1700 square feet on a 7500 square foot lot. (We live in a very high-cost area -- I paid $250,000 for it 12 years ago, I'd say it's worth about three times that much now.) And we drive old, paid-for cars. Here's where I'm puzzled by your posts: We, with a similar income, a smaller family and a much smaller house, feel the need to be pretty careful with our money. And I'm pretty amazed that you're able to live what seems to be an incredibly high-consumption lifestyle on that kind of income. I can only conclude that you live in a place where the cost of living is a tiny fraction of what it is in my world.

I don't even know why I'm telling you this. Again, not trying to give you a hard time in any way. I guess maybe it's this: We don't spend money on a ton of the things you do, most notably a big house and eating out a lot. Over the years we have compromised on some things you say you aren't willing to compromise on (the fancy expensive private school comes to mind -- DS actually did better once we moved him to public school). And we are happy. We are really, really happy.

We LOVE the fact that we are going to comfortably hit our retirement number, we love it that our house will be paid for in 8 years, we adore the fact that we're sending DS abroad next semester and have the money in the bank for that right now, we treasure the peace of mind that comes from having cash on hand to meet those semi-unexpected expenses like new washers and dryers, and we are extremely proud of the fact that we've gotten here after starting with $137,932 in non-mortgage debt about 6-1/2 years ago.

Basically, we have everything we need, and everything we want with one exception: We don't have a big fancy house. It's not because we don't like 'em. I bow to nobody in my level of covetousness for a big fancy house. I love to read Architectural Digest, I'm an HGTV fanatic, and I consider a fun Sunday afternoon one that is spent looking at open houses in the fancy part of town. I always though I'd have a big fancy house when I grew up. But guess what? Giving up the "need" for a big fancy house has made it possible for us to have pretty much everything else we want without really breaking much of a sweat.

I just ran some numbers, and we could easily qualify for a $1,000,000 house. (Although, amusingly enough, the million-dollar houses around here are about the size of the one you're currently miserable in.) The PITI on that loan, given what we could put down after selling our current house, would be in the $5,000-$6,000 range. The utilities would be at least double what we're paying now, let's say an average of $1,000 per month for water, gas, sewer, and trash. The lawn service and cleaning service would at least double. Probably have to add a pool guy. Then, of course, we'd have to buy a lot of new furniture to fill those big empty rooms. And probably in that sort of neighborhood we'd really feel like we needed to hire a decorator. I'd say moving from our current house to the $1,000,000 house would increase our monthly "nut" by at least $5,000 (the taxes, in particular, would just kill us -- right now we have a nice low rate thanks to Proposition 13). Throw in a couple of new cars to fit the new neighborhood (leases or loans -- we have a "car replacement fund" but it wouldn't cover a couple of new luxury cars), you're looking at close to $7,000. Each and every month. And we could actually make that happen if we decided it was our top priority.

Would I take that deal? No way. That $5,000- $7,000/month is what's funding all those fun discretionary categories in our Freedom Account: vacations, gifts, personal trainer, theatre tickets, semesters abroad, entertaining, DH's computer hobby, and so on. And, of course, it's also buying us the security of knowing that if one of us were to be parted from our income, we could meet our overhead just fine, TYVM. When I put all that on one side of the scale, and put the big fancy house on the other side, I have to pass on the big fancy house.

I'm not telling you I think you're wrong for making the big house your top priority. But I am urging you to take a few minutes and run the numbers, and see whether the things you're giving up to make it happen are things that you really, truly do value less than the house.

Just sayin'. I wish you well.

who has been house poor and didn't like it


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