“Sold” now hangs below the real estate sign in front of our house. All the contingencies have been cleared and it should be smooth sailing until the closing date about a month from now.
In the next few weeks we’ll be going thru the myriad of chores involved: Packing, finding a mover, switching services, dropping our homeowners insurance, picking up renters insurance, selling stuff on Craigslist. That last is an adventure worthy of its own post. Maybe with the money we raise, we’ll even buy a new mattress.
The other day a lovely young couple stopped by to pick up a variety of garden tools we are unloading. They were very excited, as they just bought their first house. It is, as she described it, a “fixer-upper” and they got it in a short sale. They are happy with the deal and busy shopping garage sales and Craigslist for all the stuff they’ll need. She can’t wait to put in a garden. They are putting down Roots.
I’ve owned this house we’ve now sold for 13 years. The one before it for 15 years. That’s 28 years of homeownership for a guy who really doesn’t much like owning houses. As houses usually are when you run the numbers, they were lousy investments. But, I’ve no regrets. They served their purpose both as a place to raise our daughter in a great school district and just because we wanted the ownership lifestyle at the time.
Critical to making this work was that in both cases we bought far less house than the world of real estate agents and lenders told us we could. 1/2 to 2/3 less. Given the reaction of these professionals we may have been the only people in human history not to have bought the absolute maximum house we could afford.
Now we are on the verge of returning to the blissful, carefree, unencumbered life of renting. Instantly, we’ll have far more flexibility and far more mobility. We are spreading our Wings.
Roots & Wings.
Many years ago when our daughter was still very young I read, or was told, that good parenting boiled down to giving kids roots and wings. Made sense to me then. Still does.
She’s just a couple of weeks shy of her 21st birthday now and has already traveled to almost as many countries and continents as I. At the moment she is in France completing her junior year of college. While there, and part of the point of going, she’s seen a fair amount of Europe. She’s just back from a weekend in Geneva. At the end of April we’ll head over to spend a week with her in Prague.
Clearly, we’ve done well on the wings side of things. And our close family relationship provides the roots. But she’ll never really have the “old family homestead” sort of roots. We are more wing type people.
The whole rent v. own financial conversation tends to generate very strong and very emotional reactions. That always seemed a bit odd to me. It is, after all, exceedingly simple to run the numbers and see which is the more financially prudent course in any given case. From there you’ll know if your preference will cost or save you money. If it saves, you need only celebrate and do what you wanted anyway. If it is going to cost, you are able to decide if you want to spend the extra money your living preferences require.
In our case, the numbers always pointed to renting as the better financial path.
Right now that’s a beautiful thing. We get what we want and it costs us less.
But even when what we wanted was a house that cost more, that was fine. What was critical at the time was understanding how much more that buying choice would cost. It was that understanding that lead to us always buy less house than we could “afford,” and that in turn made for a far more comfortable home ownership experience.*
Not being privy to the numbers, I have no way of knowing if the young couple who bought my tools have made the best financial choice. But what is clear is that they are very excited about putting down roots. They certainly have made the best emotional choice.
That being the case, and assuming they’ve not spread themselves too thin, even if the house costs more over time they will have made the “right” choice. Life choices are not always about the money, but you should always be clear about the money choice you are making.
Anthropologists tell us that we humans, Homo Sapiens, have been running around the planet for just about 200,000 years and that we have been “behaviorally modern” for the last 50,000 or so. For the vast majority of that time, we were nomadic hunter-gatherers. More wings than roots.
But then some 10,000 years ago something very profound changed. After 190,000 years of roaming around, we began farming. We began settling down. We began building cities. We began to go to war over territory. We began to put down roots.
Why this occurred is the subject of much debate and research, but nobody really knows. But occur it clearly did. It has become hard wired in our historical myths and stories:
Abel v. Cain
Hunters v. Farmers
Nomads v. Settlers
Own v. Rent
Abel v. Cain
Did “Able v. Cain” sound odd to your ear just now? It does to mine. “Cain v. Abel” is how I’ve always heard it. The farmer is named first. The farmer survived and reproduced. The hunter is killed off. The west is settled. The nomads exterminated or rounded up. Hunter-gatherers teeter on the brink of extinction. No wonder this debate is so emotionally charged. Our biases are showing.
They are even written into our tax code. Mortgage interest and real estate taxes are deductible. Home ownership is a national good and as such is rewarded. It’s worth noting that both these deductions, and the very concept of mortgages being widely available, grew out of the Great Depression. It was time of dangerous unrest. The fact that a settled population is more docile was not lost on the policy makers of the day.
We might also look at this as…
Expansiveness v. Efficiency
Personally, we fall on the side of Efficiency. We like owning exactly what we want, need and value and not a single thing else. The apartment we’ll be moving to has a bit more than 1/3 the space we are leaving. It is exactly what we need and not a square foot more. Maybe even a few square feet less. But I’d rather pare down to fit.
The problem with houses is that, even for people like us, there is the relentless tendency to expand to fill them. For those who value Expansiveness, that’s just one of their charms.
The far side of Expansiveness can be found on the TV show:
If you haven’t seen it, the program follows two guys who drive around the country looking for old things they can buy and resell at a profit in their stores. They seek out places filled to the rafters and across the fields with junk that owners have collected, most often for decades. The people who own these places and all this crap are the pinnacles of the Expansiveness motif. Once the house is filled, the barn is next. Then the out-buildings, fields and trailers they’ve hauled onto their land to hold still more.
It is hard to imagine a more different mindset than my own, and that’s likely what makes it endlessly fascinating to me. Well that, and the idea of buying low and selling high, of course.
The beauty of our lives is the endless variety of how we can choose to live them. The point of this blog is fundamentally to discuss how and why to accumulate F-you Money and the freedom it provides in making those choices.
Roots or Wings.
The choice is yours. But as with everything you chose to buy, be sure you take the time to know what it will cost.
My pal the Mad Fientist and his wife are definitely “wings” people. Here’s his plan for achieving FI with a brilliant insight into how renting will help: The Shortest Path to FI.
Recently reader John commented in this post asking about how I bought the houses I’ve owned:
You often mentioned that you’ve always bought homes that cost significantly less than what a lender was willing to give you. How have you personally gone about deciding how much home you could afford–and how much you were willing to borrow? I’m not looking to purchase for the next probably two or three years, but being debt averse makes me wary of purchasing something expensive…and where I live everything is expensive with high property taxes. Sorry if this is the wrong post to ask this question (and if you’ve answered this before…you have SO much content) but it’s sort of a debt question!
That’s a great question and one I don’t recall being asked before.
How much you can afford is easy. Any real estate agent or lender will be happy to take your income and calculate it. Figuring out the maximum you can borrow and spend is what they are geared up to do. What rattles their collective cages is when you intend to spend less. They get very confused.
In our case, we’ve always been much more interested in buying the best house for our needs rather than the most house. We’ve done it two different ways.
When we moved to Cleveland we rented for three years. For the last two of those years we made a hobby out of going to look at houses. We looked in all different communities and neighborhoods, in all different price ranges. Including those we couldn’t afford. Mostly we went to open houses and avoided getting tied to an agent who would push to see get a deal done. We weren’t in any rush. It was fun and we would not have done it this way otherwise.
We figured, we’ll know it when we see it.
In the end we found and fell in love with a beautiful old century home with all the details intact. It cost about a third of what our max was and it wasn’t in the fancy towns my work peers had chosen. The agent never knew we could have afforded more. We lived there for 15 years.
When we moved to NH we were looking to buy immediately and so didn’t have the luxury of a long slow search. Instead we selected a town based on commuting time to my work and school reputation as our daughter was in second grade.
We then looked at virtually every house for sale in that town up to our max. Drove our agent nuts. We found one we loved at about 1/3rd max but it was sold before we could get our bid in. The market was red hot at the time. The next one was ~1/2 max and we snagged it with even a small discount. It wasn’t as nice as the other place, but still very nice indeed and served our needs just fine. We lived there for 13 years.
The first property I ever bought was a sad tale, and one I describe in detail beginning here. I also bought a condo for my mother as I described in this post. Before moving to Cleveland, I bought a 2-flat in Chicago, but that was purchased as an investment and I’ve yet to write about it here.
Because we are now renting again, if I ever buy another house I’ll again use the slow and easy “Cleveland technique.”