Don't give up a lifetime of happiness for a few moments of pleasure.

Hide and Seek by Alice Dufeu
Hide and Seek by Alice Dufeu
Why do we approach buying a home backwards?

I'm not sure how my mind wandered across this lately but I started thinking about how people typically go about buying a home. Most people start saving money and once they feel like they have a decent chunk saved they begin to look at how much they can really afford and then decide from there what to buy.

I mean, this sounds reasonable. I think this is kind of how I approached it, but why did I do that. I don't do that for anything else. I would never look in my wallet and say, "I have $60, let's find a place for dinner that costs around $50 so that after the tip I have about $0 left." That makes no logical sense. When I'm hungry for dinner I decide what I want and then I look for what my options are.

To a degree people know what they want and need out of a house, but most people look for more because "they can afford it." Do you really need separate bedrooms for all of your kids? Can they share? What about the extra guest room or the office that you want in your house? Do you really need that or is it something you just want? Does your kitchen have to have a gas stove or would you be able to survive with electric?

I understand when people want their kids to be in a good school district, close to work, or safe neighborhood. But many of the things that people look for in a home is purely based on what they want.

This doesn't apply only to buying a home, it also applies to renting a home too. There have been a few occasions where the people I was living with in college wanted to live in certain apartments over others because it had a "better kitchen", mainly the only differences I could see was a gas stove instead of electric, stone instead of tile countertops, and the kicker was a $300 more per month price tag for those features. (Yes California rent is crazy... I know.)

I don't know about you, but I don't see why I would pay an extra $3,000 per year for something that is just a variation of something else that works. I also feel the same way about having a guest room. That's basically an extra room in your house dedicated to people that come to visit a few times a year. From a mathematical standpoint, is it worth it? In the bay area each extra bedroom might cost you an extra $50k when purchasing a home. Let's just say you invest that $50k into something that returns about 6%, that would give you $3,000 per year to pay for hotels for guests before you even touch that extra $50k. So is it really worth it?

Hide and Seek by Alice Dufeu
I'm not saying you should deny yourself what you want, but does spending that much extra money for things make you that much happier? For some people it might, but I'm not a Master Chef so it has to be better than a kitchen for me to want to pay more. And I think I just convinced myself that guest rooms are not the best value in the bay area. But to me it all comes back to, "What do I really need?"

I think that the only thing that I look at how much money I have available, and make a purchase based on that is stocks and other investments. Mostly because I believe investments are better than cash just lying around waiting to get eaten by inflation.

I think that this is the same reason that most people think that they should buy as much home as they can afford, they think of their home as an investment. And while homes do appreciate in value that might not matter if you never plan to sell it. Investments on the other hand can produce dividends or you can sell some of it to get capital back.

To me I view this as a practice in minimalism. Why do we get more than we really need? If I have enough to satisfy me then why do I want more? When is enough, enough?

For me, buying my freedom will give me more happiness than having many of these extra frills in life.

Have you ever bought a home or rented an apartment based on what you could afford rather than what you really needed? Do you know why you made that decision?


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