Lifestyle creep delays early retirement

[btdt22]

I don't consider a house as an investment, but I always do my due diligence as to rent versus buy when comparing shelter expenses. Having served in the military with many moves over 20 plus years of service, I found sometimes it's best to buy, and sometimes it's best to rent. The bottom line is your family needs "shelter' and it's not always 'black-or-white' as to whether owning or renting is best. Looking back over the past 50 years of renting versus buying; owning a house has proved to be the best deal 'for me' financially. That said, when I purchased a house, it was always with the intent of reselling it with minimum losses, versus a 'dream-house' purchase. Only once did my spouse and I fall in love with a 'dream' house, and that cost us dearly at resale.

Twelve years before my second retirement, I looked for the cheapest house I could find, but in the best location. My lakefront home value has now increased at least five fold, and will easily cover all assisted and long term care expenses in a high end facility if our nest egg should disappear.

 

[Hamlet]

3 of us live for 20 years in 1037 square foot house Zillow valued at 595k. From my experience those points are not silly at all.

And our house sits in prime location and does not suffer from lack of employers that pay 6 digit salaries or lack of buyers so it probably did way better then many other locations.

I think retiring at 55 is just fine. That is what we plan though we could do it today.

BTW I never missed having big house hence my opinion is clearly skewed.

As a payed off house it costs me today 30k to live in. I could probably rent it for 30k. So once we FIRE I want to be forever renter.

Your little house is more expensive than the big house we are buying. That certainly changes the consumption math quite a bit. It's one thing to add 1000 square feet for 100-150k and another to add it for 500k.

At 100k, it probably costs 6-8k in added expenses (interest, taxes, utilities, maintenance, etc). That's a significant expense, but one that is possible to justify if you enjoy the added room.

At 500k, you're probably in the 30k range. That's a more extreme price to pay for a place to put more stuff.

Being in flyover country has some advantages.

 

[eta2020]

Your little house is more expensive than the big house we are buying. That certainly changes the consumption math quite a bit. It's one thing to add 1000 square feet for 100-150k and another to add it for 500k.

At 100k, it probably costs 6-8k in added expenses (interest, taxes, utilities, maintenance, etc). That's a significant expense, but one that is possible to justify if you enjoy the added room.

At 500k, you're probably in the 30k range. That's a more extreme price to pay for a place to put more stuff.

Being in flyover country has some advantages.

Ney it costs about 150k-200k to add 1000 square feet of house out here but it will cost you 500k-over million for a lot

But 3000 square foot house will cost you 20k in property taxes and shitload in insurance, maintenance and repair. Good school districts need ton of taxes to pay for teachers. Not to mention that you need to fill 3000 square foot house with lot of stuff and it it is not going to be cheap to heat and cool.

 

[Fedup]

Ney it costs about 150k-200k to add 1000 square feet of house out here but it will cost you 500k-over million for a lot

But 3000 square foot house will cost you 20k in property taxes and shitload in insurance, maintenance and repair. Good school districts need ton of taxes to pay for teachers. Not to mention that you need to fill 3000 square foot house with lot of stuff and it it is not going to be cheap to heat and cool.

A $1.5 million for 3000 sqft here, tiny lot, 6000 sqft, $15k property tax. While it's not an investment, but it's cheaper than renting and I get a nice home equity through appreciation.
I only pay $400+ for insurance. Perhaps it's a combo of other insurance I have with AAA.

 

[eta2020]

Renters For Life - Go Curry Cracker!Go Curry Cracker!

 

[Hamlet]

Renters For Life - Go Curry Cracker!Go Curry Cracker!

Renting generally means moving relatively often. I like to stay put. I like having a garden. I like having room to have fish tanks or a comic book room. My kids will like having a play set in the backyard to play on. I like being able to modify my living space to suit my needs. You save a lot of work by renting, but you give up a lot of control too.

We'll be in this house for a minimum of 16 years unless something serious happens to change our plans. I imagine that we will consider downsizing/moving when the kids are out of the house. I doubt we will actually do it though unless our mobility gets too bad to deal with stairs.

 

[eta2020]

Renting generally means moving relatively often. I like to stay put. I like having a garden. I like having room to have fish tanks or a comic book room. My kids will like having a play set in the backyard to play on. I like being able to modify my living space to suit my needs.

Well life is not about Retiring at 40 but about enjoying living it and FIRE is in a way just side show .

I understand your point.

 

[petershk]

To your original question.

Yes. I am in that position to some degree... and many/most people are at one point.

So the question for me is whether the position is desirable or not compared to alternatives and as we can see that I'd completely case by case.

Some people are MORE satisfied living on 35k in north Carolina in a "bad" school district than they would be living on 150k in socal with kids in daycare/private school, nice house, car, etc if it meant working every day for an additional 10 years or more.

People tend to feel strongly and usually can't really imagine why someone could be happy doing something else. And it's easy to be judgemental.

For me personally what was surprising is that I thought I was one way and I'm discovering I'm another.

I'm going into "peak" earning power (40 yo) I have 2 young kids, a great well paying job (that I more or less like) and a DW that supports me. I could easily get a msg bigger house (2400 sqft, 3 bedroom currently) in a better neighbourhood, closer to work, better interior, yard and so on and that would bring some amount of happiness.

But... after taking a larger chunk of time off work I've discovered I REALLY like having total ownership of my time.

I like to be with my family 8-10 hours a day every day instead of 1-3 hours and then more on weekends.

I REALLY like ubplanning. Waking up and not having to be anywhere or do anything is great. With young kids at home it's super busy... but it's unstructured.

I DONT get bored because of lack of work. I quickly picked up some side projects and spend a few hours a few times a week in them.

So when I compare that to a larger fancier house... it doesn't provide me with nearly the value I thought it would.. but I needed to test it out and of course things can change.

So for me... time control became the most valuable thing and so the earlier I can FIRE the better. The fact that DW is aligned is critical. If she wasn't I'd happily work loner and get a bigger, better house. Giving up large amounts of liquid assets that are unlikely to be recoverable later is NOT a simple decision... and each person must evaluate it for themselves and their family.

I think the important thing is to have ownership of the decision and domestic tranquility. It can't be a selfish choice and I think there is no right answer.

The fact that you have the choice is great.

I agree with the people who say focus on domestic tranquility . Without that things get really, REALLY expensive.

Sent from my HTC One_M8 using Early Retirement Forum mobile app

 

[ivinsfan]

I don't really think of a house as an investment. It's consumption. I was just pointing out that the cost of that consumption is a lot less when you're only paying 3.6125% (tax-deductible no less ) it is costing a more modest amount to borrow that money. If inflation picks up, that mortgage that seems extreme now may look pretty modest in 20 years.

A lot of those points are pessimistic about home ownership to the point of silliness, though.

How did you come up with 3.6 as the cost of consumption? Let's see, higher price for the "perfect house", more household goods, higher monthly utilities and taxes. This all leaves you with less money to put toward ER. A house is consumption with a lot of emotion thrown in, which means one size doesn't fit all.

If inflation does pick-up you'd still be better off in a less expensive home in 20 years unless you want to sell and live under a bridge.

 

[ivinsfan]

Renting generally means moving relatively often. I like to stay put. I like having a garden. I like having room to have fish tanks or a comic book room. My kids will like having a play set in the backyard to play on. I like being able to modify my living space to suit my needs. You save a lot of work by renting, but you give up a lot of control too.

We'll be in this house for a minimum of 16 years unless something serious happens to change our plans. I imagine that we will consider downsizing/moving when the kids are out of the house. I doubt we will actually do it though unless our mobility gets too bad to deal with stairs.

This comment shows what I meant when I said the norm is for people's stuff to expand to fill their homes.If you need an entire room for your comic book collection and space for your fish tanks you will gravitate to a larger more expensive home and continue to acquire stuff, it's human nature, but can really chip away at ER plans

 

[ExFlyBoy5]

I could only imagine what the folks over on MMM would say about all this...

Sent via mobile device. Please excuse any grammatical errors.

 

[rodi]

I'm still trying to wrap my head around the idea of a room just for comic books. I have to say - that qualifies as lifestyle creep. LOL.

Renting generally means moving relatively often. I like to stay put. I like having a garden. I like having room to have fish tanks or a comic book room. My kids will like having a play set in the backyard to play on. I like being able to modify my living space to suit my needs. You save a lot of work by renting, but you give up a lot of control too.

 

[Hamlet]

I'm still trying to wrap my head around the idea of a room just for comic books. I have to say - that qualifies as lifestyle creep. LOL.

I don't think it would necessarily be entirely dedicated to comic books, just that I would have a place I could put them besides under the bed and on my dresser. I was thinking there would be a couple shelving units. I'd just like a room I could lock to keep the 3-year old out of them.

 

[ivinsfan]

I don't think it would necessarily be entirely dedicated to comic books, just that I would have a place I could put them besides under the bed and on my dresser. I was thinking there would be a couple shelving units. I'd just like a room I could lock to keep the 3-year old out of them.

It might not be a roomful now, but who knows in a few years. I've collected a few things myself and it seems easy to buy and harder to sell

 

[eta2020]

There are many things money can buy, but the most valuable of all is freedom.

 

[dadu007]

Desires change. It's okay to have a typical life in suburbia, Hamlet. I didn't meet my wife until I was 35. I have way less "freedom" now with a family to support. But I wouldn't go back to that barren bachelorhood even if it meant I would have to work unto death. What a miserable life that was. I'll take a wife and kids and a plump mortgage any day over that.

I am with you 110% about not having control as a renter. I hate it when I hear financial advisors recommending renting over owning. Are they or have they ever been renters, especially with children? Very doubtful.
And then it's the MMMers touting the same renter lifestyle. Do they have children? Usually not. I've been under the thumb of landlords. God please have mercy on me if I ever have to sell this house or rent again.

 

[Fedup]

Desires change. It's okay to have a typical life in suburbia, Hamlet. I didn't meet my wife until I was 35. I have way less "freedom" now with a family to support. But I wouldn't go back to that barren bachelorhood even if it meant I would have to work unto death. What a miserable life that was. I'll take a wife and kids and a plump mortgage any day over that.

I am with you 110% about not having control as a renter. I hate it when I hear financial advisors recommending renting over owning. Are they or have they ever been renters, especially with children? Very doubtful.
And then it's the MMMers touting the same renter lifestyle. Do they have children? Usually not. I've been under the thumb of landlords. God please have mercy on me if I ever have to sell this house or rent again.

I have rented with children. I've always try to know the area before I buy anything. One of my kids didn't want to leave the rental house. Granted it was not as nice as the house we eventually bought but she liked the location. Closer to her friends. And all her friends have smaller or worse house than the house we rented. But there were limitations, of course.

 

[eta2020]

I'll take a wife and kids and a plump mortgage any day over that.

But wife and kids do not have come with "plump" mortgage.

I will also take life with wife and kids over being single hands down, but personally I do not care about having plump mortgage. We bought house and payed it off in few years. That was long time ago

 

[Fedup]

Nothing wrong with plumb mortgage as long as you can afford it.

 

[eta2020]

Nothing wrong with plumb mortgage as long as you can afford it.

If you can afford it why do you have it? Why not pay in cash?

 

[ziggy29]

If you can afford it why do you have it? Why not pay in cash?

It's a mindset.

Some people are happy to carry debt if they can get it at 3-4%, reasoning that most likely, long term, they can beat that investing. Other folks -- and I tend in this direction, though not to an extreme -- would rather get rid of (or avoid) the debt. Last year we got a new Honda HR-V for my wife as a "present" for her ordination. We could have had financing of about 4% but I preferred to pay the entire $18K, give or take after trade-in, with cash. I'm willing to leave some likely return on the table in exchange for feeling the security that being debt-free gives. Others aren't as risk-averse.

 

[purplesky]

I've been on this board a long time. When I started on the path to FIRE, I was single, and sharing an apartment with a friend. My vision for having enough to FIRE was probably around a million dollars.

I met the right woman and we bought a small 3-bedroom house out in the suburbs that increased our living expenses but not dramatically.

Daughter #1 came along and added massive daycare costs and the desire to move into a better school district once she is school age.

Daughter #2 came along and added insanely massive daycare costs and a compelling desire to get a bigger house.

We spent the last two years or so looking at houses. We had a lot of criteria that made finding something that we considered "affordable" difficult.

We finally found a house we like last week and are now in the process of purchasing it. I'm having a hard time wrapping my head around how expensive our lifestyle has become, and how much longer we will have to work before we can retire.

My plans for FIRE at 45 have become plans for FIRE at 60.

Anyone else in that position?

I know many coworkers who bought executive type homes and they are delaying their retirements because of the big house payment.

Seems like many people get to their early 50s and get new house fever.

I will probably move to another location so buying a expensive house doesn't make sense for my situation. But it is tempting.

I stay away from display homes. I cannot afford to get new house fever.

I constantly encourage my younger coworkers to max out their 401ks but most are all saving to buy a nice house so their 401k contribution rates are just too low.

 

[RAE]

As several folks have said, it's all about choices, and you have obviously made some choices that have made you happy, so good for you. I must say, though, that the thought of a big mortgage for a $480K house later in life is awful scary (actually mind-boggling) for someone like me. I guess it all depends on location, though. We paid $56K some 16 years ago for (what I still consider to be) a very nice house (about 1900 sq. ft) for my wife and me, and her two kids, here in the Upper Midwest. I always had the goal of being basically debt-free by the time I retired, and we achieved that, which helps me sleep well at night. But everyone is different, with different priorities........

 

[gerntz]

I've been on this board a long time. When I started on the path to FIRE, I was single, and sharing an apartment with a friend. My vision for having enough to FIRE was probably around a million dollars.

I met the right woman and we bought a small 3-bedroom house out in the suburbs that increased our living expenses but not dramatically.

Daughter #1 came along and added massive daycare costs and the desire to move into a better school district once she is school age.

Daughter #2 came along and added insanely massive daycare costs and a compelling desire to get a bigger house.

We spent the last two years or so looking at houses. We had a lot of criteria that made finding something that we considered "affordable" difficult.

We finally found a house we like last week and are now in the process of purchasing it. I'm having a hard time wrapping my head around how expensive our lifestyle has become, and how much longer we will have to work before we can retire.

My plans for FIRE at 45 have become plans for FIRE at 60.

Anyone else in that position?

Many that aren't would be envious of your great life - great spouse & kids & ability to afford a big(ger) home. ER is secondary to those things. Congratulations on your success!

 

[purplesky]

As several folks have said, it's all about choices, and you have obviously made some choices that have made you happy, so good for you. I must say, though, that the thought of a big mortgage for a $480K house later in life is awful scary (actually mind-boggling) for someone like me. I guess it all depends on location, though. We paid $56K some 16 years ago for (what I still consider to be) a very nice house (about 1900 sq. ft) for my wife and me, and her two kids, here in the Upper Midwest. I always had the goal of being basically debt-free by the time I retired, and we achieved that, which helps me sleep well at night. But everyone is different, with different priorities........

I am thinking I might be able to use my SS to pay for a house.

My pension and 401k and Roth IRA should cover everything else.

I have a recently retired friend who is doing this now. His SS check covers the mortgage payment.

Obviously the idea is to retire way earlier than 60 something but if you are in that boat buying a new house would be enjoyable.