Author Topic: If you buy a house, OF COURSE you have to spend loads of money to fill it.  (Read 6223 times)

NumberCruncher

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http://www.youngcheapliving.com/2012/08/07/6-reasons-to-not-buy-a-house-even-if-you-can-afford-it/

This seems like a decent enough site - promoting living cheaply - but I find a lot of the points in this article flawed.

"2. It Is More Expensive, I Repeat, More Expensive Than Renting

This is where people are wrong. Yes, my rent is $725 per month. Yes, I could probably get a cheaper payment on a 30 year mortgage if I bought a house. BUT, that doesnít factor in all the maintenance and upkeep that I would have to spend on that house. It doesnít factor in the increased cost of utilities or all of the new furniture, new interior decoration and junk that I would ďhave toĒ buy to fill up the house. If I moved into a house today, I would fill up the living room and one bedroom, since thatís how much furniture I have right now. Sure, I could hit up the garage sales, but you know as well as I do, when I own my own home, Iím going to want that place to be nice. Iím going to spend money to make it that way. The bottom line is, owning is more expensive. It just is. Care to argue? Sounds good to me. Letís talk."

I don't know about you, but when I consider buying a house, I do take into account the maintenance, taxes, and fees associated with it - and I don't have the "need" to fill it with more stuff, nor do I have the desire for more house than I would actively use.

"4. Owning a Home Can Make You House Poor

When you buy a home and a significant amount of your income goes to paying for it each month, you are what is known as ďhouse poorĒ. Sure, you have a nice house and it sure looks fine and dandy on the outside, but on the inside, you are sweating over how youíre going to get the money to fill up your gas tank this month. Ouch, thatís not a position I want to be in. Iíd much rather be renting a crappy apartment, knowing that I could write a check for a full year of rent without flinching. Iím not apartment poor. I can get out of here anytime I want with 60 days notice or I could turn around and prepay an entire year just so I didnít have to worry about paying rent each month. Itís a great feeling!"

This, strangely enough, would also not be an issue for me. I would never buy more house than I could easily afford.

Does this article apply to the majority of people? If so, wow...they should teach basic finance in schools ("See Spot spend. Spend, Spot, spend! See Jane save. Save, Jane, save! Oh no! Spot has an underwater mortgage. Spot has to declare bankruptcy. Jane retires comfortably at the age of 28.)

noob515

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Re: If you buy a house, OF COURSE you have to spend loads of money to fill it.
« Reply #1 on: December 17, 2012, 09:20:13 AM »
This article definitely did not apply to me when I bought my house in January 2012, and I hadn't heard of MMM yet. 

The house I bought is bigger than my apartment was, but that just means I have more space to spread my current stuff out in.  (I.e., now my guest bed isn't in the same room as my gym equipment).  My mortgage, inclusive of tax and insurance, is the same amount each month as my rent was.  The electric bill is obviously higher since it was in the apartment, but I planned for that, and my other utilities are the same as before. 

He's saying not to buy a house because it will trap you to one location?  If you are in the mindset or job situation where you may want/need to move at a moment's notice, then you have no business buying a house. 

He also says he will pay for his house in cash, because he already has 35% saved, so "give me a few more years and I can definitely have 100% piled up".  While this is very mustachian of him, he doesn't really say how long it took him to save the 35%, and doesn't quantify "a few more years". 

Also, he says home ownership is a bad idea because a mortgage isn't earning you any passive income.  But rent doesn't earn passive income either, and you need a place to live.  So either way, you're "throwing your money" at something that's not earning you anything. 

I also planned for new furniture and decorating costs, because I knew I would want to paint some rooms in my house, and the house didn't come with a washer/dryer.  But I can see how some people don't plan for these things, and can get carried away with it all.  So THAT point is pretty much the only valid one in the article, in my opinion.


SwordGuy

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Re: If you buy a house, OF COURSE you have to spend loads of money to fill it.
« Reply #2 on: December 17, 2012, 10:07:05 AM »
http://www.youngcheapliving.com/2012/08/07/6-reasons-to-not-buy-a-house-even-if-you-can-afford-it/
Does this article apply to the majority of people?

For many, many Americans, this would be awesomely better advice than they would think of themselves.

Jamesqf

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Re: If you buy a house, OF COURSE you have to spend loads of money to fill it.
« Reply #3 on: December 17, 2012, 11:36:49 AM »
Can't see a lot of this myself.  My utilities are cheaper in my house (been running $40-50/month), because I was able to upgrade insulation &c, and will be cheaper still when I get around to installing solar.  Yeah, I have more "stuff" but a lot of that is things I enjoy playing with.  In an apartment, I'd be paying for a storage place, or accept a diminished quality of life.  With a garage/workshop & tools (I know, more "stuff") I can do all sorts of maintenance & repair that I couldn't do in an apartment.

As for being "trapped" in one location, I suppose that's a matter of attitude.  I WANT to live here, to be able to enjoy the garden & the produce of the fruit trees I planted a decade ago, and the ones that will take another decade or so to mature. 

Khao

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Re: If you buy a house, OF COURSE you have to spend loads of money to fill it.
« Reply #4 on: December 17, 2012, 12:40:30 PM »
This article hit home so hard with me. Bought a condo last February with my gf and still haven't moved in since the construction isn't done yet (we move in at the end of January 2013!) but while we are waiting for the condo to be ready, we have gone over all the things we need to do before/when moving in and I had to fight my gf so hard to NOT buy everything new.

This line in the article describes my gf pretty much :

Quote
that doesnít factor in all the maintenance and upkeep that I would have to spend on that house. It doesnít factor in the increased cost of utilities or all of the new furniture, new interior decoration and junk that I would ďhave toĒ buy to fill up the house
emphasis mine

So we lived in this lovely apartment for two years and now we want to move in a condo that's smaller than our apartment, yet we have to buy all new furnitures? Woah let me stop you right there honey, our furniture was great in the apartment, it will be great in the condo. I'm not buying a new sofa for 1.5k or new stainless steel kitchen appliances just because it's a new place to live. It was SUPER hard to convince her to not buy any thing for the condo before we actually move in, she basically wanted us both to max out our credit cards in furnitures/appliances/decoration months before moving in the condo.

It was a long fight but I did manace to face-punch her hard enough to smack some MMM sense into her (I did not really punch my gf, I love her!) She recently started reading The Rich Barber, so it's working!

In the last 2-3 months (I started reading MMM only in September~October and started talking more and more personal finance with her around the same time) we cleared all our credit cards, reduced our food budget by cutting a lot on restaurants and preparing a lot of dishes at home, reduced our "random shopping" a ton, saved nearly 10k extra for the condo that will come in handy when we finally move in and we won't have a single credit card debt because of the condo.

NumberCruncher

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Re: If you buy a house, OF COURSE you have to spend loads of money to fill it.
« Reply #5 on: December 17, 2012, 12:43:49 PM »
In the last 2-3 months (I started reading MMM only in September~October and started talking more and more personal finance with her around the same time) we cleared all our credit cards, reduced our food budget by cutting a lot on restaurants and preparing a lot of dishes at home, reduced our "random shopping" a ton, saved nearly 10k extra for the condo that will come in handy when we finally move in and we won't have a single credit card debt because of the condo.

Hey, congrats! Way to fight consumerist urges! :)

Ozstache

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Re: If you buy a house, OF COURSE you have to spend loads of money to fill it.
« Reply #6 on: December 17, 2012, 01:42:30 PM »
"2. It Is More Expensive, I Repeat, More Expensive Than Renting

This is where people are wrong. Yes, my rent is $725 per month. Yes, I could probably get a cheaper payment on a 30 year mortgage if I bought a house. BUT, that doesnít factor in all the maintenance and upkeep that I would have to spend on that house. It doesnít factor in the increased cost of utilities or all of the new furniture, new interior decoration and junk that I would ďhave toĒ buy to fill up the house. If I moved into a house today, I would fill up the living room and one bedroom, since thatís how much furniture I have right now. Sure, I could hit up the garage sales, but you know as well as I do, when I own my own home, Iím going to want that place to be nice. Iím going to spend money to make it that way. The bottom line is, owning is more expensive. It just is. Care to argue? Sounds good to me. Letís talk."

I don't know about you, but when I consider buying a house, I do take into account the maintenance, taxes, and fees associated with it - and I don't have the "need" to fill it with more stuff, nor do I have the desire for more house than I would actively use.

Also, through the magic of inflation, rents go up but loan repayments at a given interest rate stay the same, therefore your ongoing costs get increasingly cheaper in real terms when buying instead of renting.

Kraig

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Re: If you buy a house, OF COURSE you have to spend loads of money to fill it.
« Reply #7 on: December 17, 2012, 05:55:29 PM »
Hi All,

My arguments were geared mainly toward regular people out there who think buying a house is the automatic thing to do to win financially. I respect all of you who own homes and as readers of Mr. Money Mustache, I'm sure you either made the choice that's best for you or figured out how to make it work for you after the fact.

I did not try to imply that buying a home isn't a good idea, because it is for many people in many situations. I was just playing devils advocate and saying that hey, renting is good too.

Kraig - Young, Cheap Living
http://youngcheapliving.com
« Last Edit: December 17, 2012, 05:57:25 PM by yngcheapliving »

chucklesmcgee

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Re: If you buy a house, OF COURSE you have to spend loads of money to fill it.
« Reply #8 on: December 17, 2012, 06:31:35 PM »
Hi All,

My arguments were geared mainly toward regular people out there who think buying a house is the automatic thing to do to win financially. I respect all of you who own homes and as readers of Mr. Money Mustache, I'm sure you either made the choice that's best for you or figured out how to make it work for you after the fact.

I did not try to imply that buying a home isn't a good idea, because it is for many people in many situations. I was just playing devils advocate and saying that hey, renting is good too.

I agree. The mentality of the house as a good investment is just bogus. A house is an expense that might help to mitigate other expenses, maybe, not an investment. There isn't very good evidence that housing prices rise much faster than inflation and once property taxes and costs of actually selling the home are factored in, you won't see any return on your investment unless the house is held for many years. Even then, the opportunity costs of your down payment are enormous.

A house is an expense. For some people a worthwhile expense. But an expense nonetheless.

NumberCruncher

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Re: If you buy a house, OF COURSE you have to spend loads of money to fill it.
« Reply #9 on: December 17, 2012, 06:33:04 PM »
Hi All,

My arguments were geared mainly toward regular people out there who think buying a house is the automatic thing to do to win financially. I respect all of you who own homes and as readers of Mr. Money Mustache, I'm sure you either made the choice that's best for you or figured out how to make it work for you after the fact.

I did not try to imply that buying a home isn't a good idea, because it is for many people in many situations. I was just playing devils advocate and saying that hey, renting is good too.

Kraig - Young, Cheap Living
http://youngcheapliving.com

Ah, I think we misread the tone of the article. It is sadly true that most people don't think through home buying and automatically assume it is good, regardless of situation. :-/