Thinking about buying a bigger house?
Well, you never just buy a bigger house.
You also buy a bigger light bill, heating bill, water bill, insurance bill, decorating bill, remodeling bill, lawn care bill. And if you happen to move into that nice upscale neighborhood, you might also tack on to all the rest a larger set of expenses for a more upscale lifestyle (food, travel, entertainment).
None of this is necessarily good or bad. It’s just reality.
A home purchase is primarily a lifestyle decision and secondarily an investment decision. As a result, the more home you buy (and all the other expenses that go along with it) the less money you have to create financial independence, freedom and margin for yourself.
The new house might get old, but the notes stay with you for 15 or 30 years.
On the other hand, all money gets spent by somebody, so being too much of a hoarder of wealth does no one any good either. So go ahead and spend what you earn on yourself, those you love and causes you believe in…just make sure you don’t spend it all today.
Most people err on the side of buying too much house, rather than too little.
How’s this for a crazy idea – start building your financial house first, then build your physical house.
If you will make sure you have your financial house in order first, then you’ll be able to actually enjoy that beautiful new physical house you either buy or build. I have known far too many folks that bought too much, only to live in constant stress and fear of losing their job and maybe even their home.
Getting your financial house in order means protecting your valuables (tangible and intangible), spending less than you make and making sure you save enough to move towards financial independence.
Only then should you make decisions about how much house you can afford.
Unfortunately, I almost never see anyone make their decisions in this order.
Financial house first, then physical. It’ll make for a more peaceful … home.