by Josh

A little bit of background to bring you up to speed on where I’m at in life. Back in July I graduated from college. The same month I married the woman of my dreams. That same month as well we moved across the country from Mississippi to Colorado. We both were extremely fortunate to have parents who went above and beyond to make sure we were provided for which ultimately meant we started our new life together without a dime of debt…college, cars, etc were all paid for. And to clarify that, they didn’t serve us everything on a silver platter. We both have held jobs everyday of our life since we were 16 and paid for all of our possessions. They just worked hard to help pay for a quality education and essentials like transportation….something we plan on doing our best to offer our kids as well.

We currently live in a two bedroom apartment but, as with most people, would love to get into a house as soon as possible…mainly because paying rent feels like money going into a deep dark pit of nothing. But what we’ve really started debating lately is the idea of saving for a house over quality of life. We’re certainly not of the mindset that material things make life better…but in a way they do.

Do we save now for a house or buy the night stand so we aren’t using a plastic crate? Do we go out to eat tonight or cook at home? Do we get a fish tank or just do without?

Obviously these are all pretty superficial things. But to some extent they aren’t. All these little things bring some sort of indirect joy to life. Having a level surface to put a lamp and a clock at night, enjoying a fun night out and a tasty meal at a restaurant, and adding a few little swimming creatures to the room all just bring something to the table that getting in a house sooner than later just don’t seem to be able to do.

I have many friends who are of the camp that we should save every penny we can to get a house, a new car, a __________. But I’m a firm believer that expensive things aren’t necessarily what to strive for in the short run…sure it’s a necessity to save money and we will eventually get that house…but what I believe is that, in the long run, life we’ll seem much more enjoyable if I lighten up a bit with my money and chose to live a bit more spontaneous and care free.

There’s obviously no right or wrong opinion here. What are your thoughts?

45 Comments on More money or higher quality of life?

  1. Bill says:

    Be more carefree…deliberately. If you have a set dollar threshold for the spontaneous items, you get the best of both worlds.
    Ever need to go on a diet and you completely gave up all “bad” foods that give you joy? That’s what living too tightly is like to me – when you “cheat”, it’s over-the-top-cheating.
    Setting a limit will give you that taste, but still allow you the satisfaction at the end of each month to see your down payment fund grow.

  2. I’m with you on this one. I find the whole concept of _saving_ money to be a bit backwards. You should be _making_ more money in order to have more. Or at least that should be your attitude towards life.

  3. Kevin says:

    Save as much as you can now. When you are older you will never remember the nice meals and the level bed stand. What you will remember is the crate and the meals that you cooked yourself and ate with a few candles and a cheap but nice bottle of wine. You will look back on all of this while you are retired at age 50 if you start saving now. All your friends will still be living paycheck to paycheck while you are living the REAL good life.

  4. Jon Bell says:

    I find the whole concept of saving money to be a bit backwards. You should be making more money in order to have more.

    I completely disagree. It’s not what you make, it’s what you spend. I’ve been surprised with what sorts of amazing things I can have (such as my lovely house) by some simple and not-very-aggressive budgeting.

    In video game terms, save up your small powerups for some really big ones.

  5. Fred from Seattle says:

    I can see both sides here. I am 29 and bought a house when I was 26. Every year since I bought, my income has gone up about $2,000, making the mortgage payment easier and allowing me more of the “things” you talk about. At the same time, my wife and I have over $100,000 in equity with only $8,000 (3%) down. Of course markets vary and the housing market in general is due to cool off, but still…it feels nice. If we make a few extra payments now and then we could have our house payed off by the time we are 50.

    On the other hand, the idea of being completely debt free and having no obligations (such as mortgage) is very appealing. Have you tried living in another country yet? Have you tried your hand at a couple of totally different jobs? I got to explore some, but right now I feel chained to my house payment, CC payment, etc. I work just to make my payments and don’t exactly enjoy what I do. Freedom is like a distance memory.

    So you are right. There is no correct choice. I hope to find work that I enjoy more and make enough money so that I can explore my interests more while keeping my house.

  6. Lea de Groot says:

    Its important to remember that saving for a house is different to a lot of the other savings that a young person may do – to save up for a car is to spend money on lifestyle today, to buy that new lightstand is to spend money on lifestyle today.
    To save up for a house is about not paying someone elses mortgage, but paying your own; its an investment so life doesn’t hurt when you have kids, and when you are old.
    How would you feel if you were 80 and living on cat food because you knew you had blown it all on ‘quality of life’ in your 20s? How will you feel if you can’t get that good birthday present for your child that you wanted to, because the house payment is just too big on one wage?
    Save for the house. Buy something that gives you the smallest mortgage possible, then make paying that off hurt just a little – not a lot, but a little, but the mortgage payments should always hurt, or you’re just giving money to the bank’s shareholders, and who do you work for? Them, or you?
    And the nightstand? Spend $5 on a nice throwrug and forget whats under it :)

    Sidenote: I sometimes think that parents who set their children up too well do them no favours, because those children don’t understand that their parents went without a long time ago to be able to do that today.

  7. Josh says:

    @Lea: I figured somebody would bring up the point about parents giving to much to their kids…I should have mentioned something in the article to clarify. Our parents didn’t “give us everything.” I’ve held some form of a job every day of my life since I was 16. I’ve always had to work for stuff. I worked to pay every single dime of my $10,000+ computer rig. I made car payments on my car. I paid for my own food in college. Etc etc.

    Point being that my parents didn’t just pay for anything and everything and server it to me on a platter. They just worked hard to make sure I got a good education and didn’t have $30,000 in school debt.

  8. Lea de Groot says:

    Thats good – hope I wasn’t being rude; it wasn’t intentional :(

  9. Ed Byrne says:

    How about doing both?!

    Just get a big-as*, 40 year mortgage and buy that lovely house. Repayments will probably be around the same as rent, except you’ll actually be creating equity every year as the house value goes up. There’s nothing like property to increase personal wealth over time.

  10. I recommend you to read or listen to Robert Kiyosaki’s Rich Dad Poor Dad books/CDs. It has made a real difference in my thoughts. He talks about the differences in the thinking of the poor/middle class and the rich. It was a real eye-opener for me.

  11. William says:

    I bought a 3 apartment triplex with a no money down, 100% financing mortgage 3 years ago, and moved from a one bedroom apartment to a similar sized apartment in a house I own for about the same financial outlay that I would have experienced if I’d moved to a different apartment. My portion of the mortgage, after collecting the rent from two tenants, is the actually less than I was spending for the apartment and a storage unit before (Now I have a basement and garage for storage) and if I ever chose to move I could conveivably keep the house and simply rent it, asking a property maintenance company to find tenants for me. I already have enough equity in the house that I could use a Line of Credit to make a down payment on another house, so the single family home option is always available, and I’ve had tenants who are making my house payment for me.

    Your parents obviously made wise investments that allowed them to give you one huge head start over other folks (I’ve got 3 more years of student loans! Ack!) – but I suggest that you start making wise investments that fall in line with your personal goals. I’m 30 and even with college and transportation debt my girlfriend and I own $350,000 in rental property – all with no down payment and with many options rather than being “tied to the mortgage.”

  12. William says:

    I bought a 3 apartment triplex with a no money down, 100% financing mortgage 3 years ago, and moved from a one bedroom apartment to a similar sized apartment in a house I own for about the same financial outlay that I would have experienced if I’d moved to a different apartment. My portion of the mortgage, after collecting the rent from two tenants, is the actually less than I was spending for the apartment and a storage unit before (Now I have a basement and garage for storage) and if I ever chose to move I could conveivably keep the house and simply rent it, asking a property maintenance company to find tenants for me. I already have enough equity in the house that I could use a Line of Credit to make a down payment on another house, so the single family home option is always available, and I’ve had tenants who are making my house payment for me.

    Your parents obviously made wise investments that allowed them to give you one huge head start over other folks (I’ve got 3 more years of student loans! Ack!) – but I suggest that you start making wise investments that fall in line with your personal goals. I’m 30 and even with college and transportation debt my girlfriend and I own $350,000 in rental property – all with no down payment and with many options rather than being “tied to the mortgage.”

  13. Live in the now as long as it doesn’t compromise the future. I think it comes down to whether you value what you have in the present. Goal oriented people are incapable of valuing what they have, and this is what keeps them ticking over.

    If you’re self aware enough to recognise these traits in you, locking into a mortgage may provide you with the satisfaction of a goal and the opportunity to plan how to get there.

    If you value the tangible now, then by all means don’t disregard the opportunity to revel in what is available to you.

    Regardless, have dinner parties at home, they’re a great homely yet social habit. As Sarah Connor says, there’s no fate but what you make.

  14. Bryan says:

    Sidenote: I sometimes think that parents who set their children up too well do them no favours, because those children don’t understand that their parents went without a long time ago to be able to do that today.

    Ever heard of “I want to give my kids what I didn’t have”?

    Same concept.

    Keith, I am in your same boat.

    July 2004, my wife and I got married. My father has done well for himself and has provided me things in my life that unfortuntatly, other people might not have had. I have been very humble my whole life with the opportunities I have been blessed to have.

    My wife and I also entered a marriage with very little debt because our parents wanted to make sure as we grew up that our life was “easier” then their’s had to be.

    I went to school on a golf scholarship, so my college is actually paid off. My wife’s school is still being paid for, but it’s still under her father’s name, so the debt isn’t on my wife.

    Anyways, we got married and lived in a 2 bedroom apartment like yourself. We lived there for 1 year and 6 months paying $720/month.

    I was lucky with some financial investments, Sirius Satellite Radio stock, and sold that for a downpayment on a Beazer Home. This past November my wife and I moved into our home.

    Oh, and I forgot to mention that we just had the birth of our 1st child :), so as you can see, in a matter of less than 2 years, we have been married, got a new home, and had a child.

    Oh, and another thing, we are a single income family. We wanted my wife to be a stay at home mother as I personally feel there is a lack of that in today’s society, but it’s what she wants to do and I am 100% cool with that. It’s the hardest job in the world.

    Financially, things are tight, as you can imagine. BUT, the “quality of life”, is what I am striving to make better. Quality in terms of family.

    I bust my ass every day and night to make sure we not only get by, but have enough to set aside for some savings. As the sole income provider, I obviously want to increase my income and wealth so I can provide my son with the opportunities I did not have.

    Buying the house was the right decision because it has started an investment I didn’t have before with an apartment.

    With an apartment, you are literally burning the full monthly rent with nothing in return besides a roof over your head for another 30 days.

    With a mortgage, at least the house is gaining value and something you can sell down the road to buy a bigger house.

    Question for you? Is buying that new table, a nice dinner, and a fish tank really going to put you in a position where you can’t save for a house?

    If you don’t have any debt right now, or very little, you are in a better position than probably 95% of the population.

    I agree with the others, there is sometimes too much focus on the “saving” mentality versus “making” mentality.

    If you convince yourself to make money, than naturally you will have more to save.

    Good article btw.

  15. Tana says:

    You don’t have to have a ton of money to buy a house. My opinion is actually that you should buy a small house that you can afford, furnish it modestly, and then in five years, sell it and buy a better one. Figure out what your “dream” house is (remember…small – you don’t want to be “house poor”) and then start buying furniture now that will look nice in your dream house. You don’t have to buy the nicest, newest furnture, but you don’t have to buy the cheapest either. Buy things that will not be too nice for your apartment but will look nice in your house. I mean, once you buy a house, you will want furniture for it – why not have the furniture now and enjoy it while you’re saving for the house?

  16. First, are you planning on staying in your current location for more than 3 to 5 years? If not, you are probably better off staying in an apartment due to transaction costs.

    If you’ve decided that you do need a house, determine how much of a house you need and the price range you can afford. Don’t over-extend yourself on this because you will probably need to account for your financial sitution over the next 30 years. I think the rule of thumb is no more than 30% of your pre-tax income towards your mortgage and property taxes.

    With a price tag in hand, you can set a goal of how much money you must have for a down payment. I ended up going for 5% down, a 80% loan, and a 15% piggy back loan to prevent paying PMI. Personally, I wouldn’t go any lower than 5% down and ideally you would have 20%. Save towards your goal, and probably a bit more for some wiggle room if you find that perfect house.

    Personally, I made saving for a house a priority. I think that ultimately owning your own house is going to be far more satisfying to you than an end table or a fish tank. It’s going to be hard now, but it’s worth it.

  17. Speaking from the downward slope to 40: I now “live very comfortably.” I’ve got my toys, my furniture, my creature comforts, etc. I’m 100% debt free, and still I sink money into someone else’s pocket every month for rent.

    “If only I had started saving earlier” crosses my mind a couple times a day. Sure, I’m doing the right thing now, and it’ll be 18 months to 2 years before I’m actively looking at the market. But still.

    It could much more easily have been 12 years ago.

    Suck it up, go for the house. Keep a picture of a new house on your fridge so you know why you’re eating pasta again.

  18. ..ak says:

    I ask myself the following question: Will spending the $100 bring me comfort or will $100 in my pocket ? If I can’t come up with an answer on either one, I default to $100 in my pocket.

    The key term is “comfort” not “lust”. I’ve longed for a new Palm for a few months now but each time I keep the money. I will probably go like this each time I need a PDA for the next few months. Either I can justify the expense in a few months or I forget about it.

    This way works for me because it gets rid of all my impulse buys. I decide I want something, then I “trial run” myself for a few months, and I will come to a decision.

    Software, hardware, clothes, furniture, etc.

    It’s not without fault. I’ve sometimes been too slow and I can’t find the product again or the price goes up. Sometimes I realized I should have gotten it immediately.

    In the end, I feel like I am making the right decisions for me today. In the future… we’ll see.

  19. Jeff says:

    See comment 3 (Kevin) for my sentiment.

  20. Ville says:

    Whatever you do, just don’t buy a fish tank. You might like to stare at it the first year or so, but after that you’ll realise how much trouble the cleaning up, feeding etc amount to. Or the thing starts to leak. Then you’ll give/sell it to some friends and they’ll be stuck with it. Believe me, i’ve seen this happen to the best of us.

  21. Ro says:

    My husband I developed a plan where we had two types of savings – long term, for house, car (big things) and short term for stuff we simply wanted (much more modest things). We wouldn’t indulge our whims immediately, but had a 30 day rule. If at the end of 30 days we still wanted or needed the thing, we would get it — after doing thourough comparison shopping (of course). My husband is a notorious thrift-meister — however he isn’t a skinflint and this system has allowed us to plan for the long-term and yet still indulge and feel rich as kings.

  22. Somebody did a study a while back and found that what really mattered to people wasn’t the material “things” that they had in their life that mattered most to them later in life. It was the “experiences” that had that they carried with them the longest and made them the happiest.

    The things they had were forgotten and didn’t really play into their fond memories. But the experiences that they had when they were younger apparently did. In fact, the more experiences people had, and the longer that they remembered them, it seemed that would remember them even more positively than they actually were. As if the memories, like a good wine, got better with age.

    So if you have a choice between spending money to have something, or to do something, you’d be better of doing something.

    With that in mind, I’ll relate my experience… I made decent money coming out of college, and I spent pretty regularly on material things. Not excessively. I went from an 8 year old Hyundai to a Honda civic that is now 10 years old, My stereo system is 19 years old. I wear my sneakers out. I don’t buy a lot of clothes.

    But somehow, we never managed to save a lot of money. We just didn’t “watch” our money and we didn’t keep tabs on our budget. I used to, but I gave up after a while because I just couldn’t keep track of the 1/2 of the money that my wife spent. She wasn’t totally out of control, but she didn’t like the idea of me keeping tabs on her money I guess.

    Then came an opportunity to start my own business. I would quit my job to do it. I had some savings, but boy, I sure wish I had more savings than I did. I realize now that I’d pissed away a lot of money on things. Going out to lunches, high long-distance phone bills (Thank God we have Skype now!), unnecessarily generous gifts to friends and family, and other “nice to have” kids of things that we really didn’t need.

    People (including myself in my earlier years) don’t realize that the more savings you have, the more freedom you have. How many people out there think that it’s important to enjoy your money NOW, and so they buy fancy cars, fancy furnishings, expensive clothes and accessories, and impressive houses, only to find themselves working overtime to pay it all off. I know people like that. They don’t have the freedom to quit their jobs to follow their dreams. Or their spouses won’t let them quit their jobs because they won’t take the hit on the lifestyle. Sad!

    This is why I have to disagree with George above. He says, “You should be making more money in order to have more. Or at least that should be your attitude towards life.” That attitude gets most people into a position of being a slave to their jobs or careers. Always having to work harder to make more money to afford more things.

    There are a bunch of books about this. “Affluenza” comes to mind. I think if you look that one up on Amazon, you’ll find other related books. Maybe you should read one of those to help you to shape your own beliefs about what you should do as far as planning your financial future.

    Dining out is nice. I enjoy it on occasion, but wouldn’t want to make a habit of it. Instead of dining out all of the time, take the money and start putting it towards equiping your kitchen with good quality pots, pans, a KitchenAid mixer, and a good set of knives, some wine glasses… Start a gourmet club with some of your friends. You’ll save a ton of money and have plenty of good times eating good food and drinking with friends without breaking the bank.

    You’ll have more money that you can use to travel, or to save up for the day that you’ll want to quit your job to open up that business you’ve been dreaming about.

    Best of luck!

  23. Peter Ottery says:

    hi, short time reader, first time commenter.

    another personal experience to add to the mix….

    my wife and i bought our little 2 bedder 3 years ago and it was the best thing we’ve done. after you get over the hump of saving up that deposit and meeting the payments for the 1st year or so it gets easier.

    Your payments gradually go down as your principle gets smaller, instead of your rent going up as the landlord gets happier.

    depends on your financial situation and how close you are to making those payments but for us once it was all set up (the mortgage) it all happens automatically. for us, its an excellent method of forced savings.

    and its not like you “never” get to treat yourself. “spontaneous and care-free” can still happen very cheaply. 2nd hand fishtanks are often as good as new. agreed they are time consuming to look after but my dozen tiger barbs and couple of bristle nose catfish have provided way more entertainment than the couple of hundred bucks they cost.

    work to live. dont live to work.

  24. paul merrill says:

    You need to strike a balance between both… mental health is imprortant. If you can never do anything fun, life becomes miserable.

    Definitely go for a lesser car & a greater dwelling (but not more than you need). It’s that old principle of putting your money into things that appreciate rather than depreciate.

  25. Charles Follymacher says:

    First off, congrats on graduation and marriage. Two huge milestones knocked off in the same year — woo!

    Secondly, what the heck do we know? Go see a financial advisor or three.

    Thirdly, the above withstanding, I can say that the Silver or Bronze rule of life is everything in moderation. My wife and I have been together for 13 years now, and it’s fun sometimes reminicing about what we had when we started. I love to see a growth curve, however slight.

    Your rent, however, is not going into a hole. It’s paying for a pretty valuable service. Even when you “buy” you won’t normally own it for another 20 years or so anyway. Til then, it’s a partnership between you and the bank. So don’t kid yourself.

    Man and wife do not live on crates alone. Absolutely, make room in your budget to live a little. Go out every once in a while. Order a nice scarf or something from jcrew (or wherever). What I’d be mindful of is buying “extras” that require maintenance. A nice bedside table is not only aesthetically pleasing, but it’s emminently practical, too. The only upkeep is a cloth to wipe down any dust every once in a while.

    A fishtank? Well, however soothing that may be, there’s going to be an ongoing cost to upkeep. It’s the present to yourself that keeps on taking.

    Presumably, in the years to come, you’ll both be making more money anyway. You’ll have opportunity to save even more as you go along as long as you keep a reasonable reign on your “extras” spending.

    Good luck!

  26. Amy says:

    I think it’s a pretty simple decision. Nothing’s so dispiriting as walking into your own home and not being comfortable, whether it’s rent or own.

    If you buy yourself a decent piece of furniture, you’ll have something to fill out your house when you get there. Otherwise you’ll end up with a house full of crates, too, and that’ll be really depressing!

  27. Ross Belmont says:

    Quality of life, all the way. Only strive for as much money as will get you your quality of life.

    You can’t take it with you.

  28. Laura says:

    A suggestion: do the math. Decide how soon you’d like a house (one year, five, ten). Determine what percentage of the purchase price you’d like to put down. Find out the average price for the type of house you’d like (obviously this will go up over time, but prices are high now and will probably go down). Figure out the average down payment you’d need for the average house. Divide down payment by the number of years you’re willing to wait. Divide that figure by 12. This will give you a ballpark figure you’d need to save each month for that one year (or five or ten). I’ll just say from personal experience that we own a house and it’s great. If you do it when you’re ready, it’s awesome. More privacy and the knowledge that your hard-earned money is building equity.

  29. Kevin says:

    Live below your means. Money troubles are a type of stress that can make life miserable. Once you have the basics (food, decent shelter, clothing, a decent DVR) happiness is to be found more in time with the people you love, your friends and family, than in material possessions. If you spend less you can work less and save more so money will not drive your life and earning it won’t consume all of the time you could spend enjoying time with people. If you find a job you love and are passionate about and work hard to improve at it more money will come in time.

    As far as your current spending goes, don’t be a scrooge, but live within a modest budget. Think about when you were in high school or college and could make a $20 last all week while you went out with your friends. A little entertainment money can go a long way if you’re creative about it.

  30. larryr says:

    Here is what i did. I went into the Marine Corps right after high school to experience the world. I got to see how they lived in some 3rd world countries. Then I partied it up for a good 5 years or so. I never considered buying a house, or getting married, or kids, or anything that would tie me down. Then i started getting a little more serious about my “career” and started to learn more, and make more. I then invested in a house, actually a duplex. I lived in half and rented the other half out and the rent i got made the house payments. I still partied, but not as much. Then one day around age 35 I realized that I was no longer a teenager even though I acted like one since i was still single and living in an apartment with not much responsibility. So I decided to make a change and be more responsible. Here I am at 37, married, with a kid on the way, and wow, we own our house, and still have the duplex as an investment income, and plenty of money to spend of “grown up” fun stuff, oh and a savings too. Imagine how much we’d have now if i wouldnt have blown it all partying it up for 15 or so years. Who knows, maybe nothing. I wouldnt give up “experience” for anything. I might have streched it a bit, but i say trust your insticts. I did and so far so good. While i’ve been married for less than a year, most of my friends that got married 15 years ago are now divorced. I guess my point is, wait to make the big decisions until you are a little older and a little wiser and have some life experience.

  31. Harmony says:

    A good, thought-provoking post. I think it simply comes down to what you feel you need to be content in life. What is your driving motivation?

    If it’s financial security and assets then forgo the fish tank and the dinners – budget hard and work towards your goal of buying and paying off a house. It -can- be done in 5-10 years if you buy properly and economically, but the banks like to make us think that a 30 year mortgage will take you 30 years to pay off.

    Also while doing all this begin to re-adjust your thinking, to find greater contentment in the little things you already have, to be able to look at the plastic crate and realise that the $100 you saved on a bedside table just added X dollars to your savings account or took X amount of time off your mortgage. And if you find you really just must have that bedside table anyway, then budget for it, save, realise you can have it but just not straight away if you also want to achieve a dream of financial security and freedom from debt.

    In the same way, if your motivation is being able to be flexible with your money, then do that and make sure you enjoy it! It’s not about what’s right or wrong or mainstream, it’s about what you can be happy with.

    What sounds like it might work best for your situation is to still save consistently for your home, and budget everything if you’re not already doing so. Give yourself $X for dinners out each week, and $Y for miscellaneous expenses like the fish tank or bed stand, and don’t go above those amounts. That way you’re still able to enjoy going out and buying the things you like, even if some things may take longer to buy than they used to, and you’ll also be getting closer to your goal of owning your own home.

    For me that’s exactly what I do. Years ago when I wasn’t that keen to buy a home I still had a budget but the amount allowed for going out and buying whatever were larger. Now, getting ready to buy my own place, I’ve narrowed down the spending columns and put the excess into my savings account. I also always try and keep in mind the best explanation of assets and liabilites I’ve ever heard (very simplified yes, but effective):

    An asset is something that puts money in your pocket.
    A liability is something that takes money -out- of your pocket.

    So for me, a new bedstand or a fish tank is a liability, and at this point in my life I don’t want liabilities, I want only assets so I can increase the rate at which I turn my next big liability – the interest on my home loan – into an asset that generates income for -me- not my bank. And to do this I tend to go without a lot, but my core motivation is long-term financial security, I really really really don’t want to be still getting up and going to work every morning when I’m 50 years old just to pay off a mortage. And the funny truth is, that makes the going without so much easier to deal with, and in fact I’m more content now with less, reaching my goal, than I ever was when I bought everything I wanted.

    Ye gods, I’ve gone on haven’t I ;) All that to say, I think you have to do what feels right for -you-, and there are ways you can do that and also reach your other long-term goals if you want to.

  32. martina says:

    Budgeting is good at any age-so long as you follow the “rules”. You always appreciate things more if you save up first. You may not always want to live in the same town and buying a home now may not be the best. By the same token, you might want to buy a duplex or something, rent out half/live in another half. Buying a home involves other things besides mortgage-there are the utility bills, repair bills, etc. that you can be surprised with, as well as property taxes. My suggestion would be to determine a good budget plan and stick to it; Think very hard before spending large amounts of money, invest some of your money and think very thoroughly before you make big purchases. Also keep some money aside for fun trips and luxuries for you and your wife to share.

  33. jim says:

    I am in a whole hell of a lot of debt, and I also rent a room in a house with two other people, one of whom owns the house. I like the freedom it provides–I like that I don’t HAVE to work fulltime, all the time, I like that I can tell Meredith “hey the ___ needs fixin'” and help her fix it, but the cost of the materials isn’t mine.

    I dont have kids, and I DO have a HUGE credit counseling payment due to some foolish spending, but also buying things that my parents couldn’t provide for me when I was in college. I envy you getting out of college debt free, but I also know that I would have gone nutty if I had worked fulltime while I was studying fulltime.

    I really like that right now, my set-in-stone payments are credit counseling (because if I dnt’t keep up, all the interrest rate bbreaks are toast) and rent (which includes utilities). And cell phone, if I decide to keep one. That’s it.

    I have been blessed (since moving to portland, which is a town where this is pretty easy) with the opportunity to sometimes only work from home, and so I’m able to make my own schedule. I can take a trip to Korea for three weeks because I can work from home, or I can simply hang out with friends every night because I don’t HAVE to be working at 8:30 every day. With my background (education and art), I would be hard pressed to work enough to earn 6 figures, so I’d rather save when I can, but also live life always. It is a struggle, but I enjoy life so much more when I choose experiences over things, less working and more belt-tightening over godawful jobs that make more money (see, I get depressed when I am in those jobs, and so I spend even MORE, yknow?).

    So I think that you can go either way on this, but you know, you can also remember that you can probably get a free/very cheap endtable on craigslist or freecycle. Oh, and going out to eat really adds up. I typically only do so twice a month or so (eventually, it will feel VERY decadent, which keeps you from doing it but also makes it a bit more fun). Start doing potlucks with friends- once a week-rotate them around, and for the price of one meal out, you can have four!

    oh, and finally, i firmly DO NOT believe in “work more so you can save.” I say, stop spending so you can save.

  34. Lilly says:

    Things change when you catch yourself living in a town where 1 bedroom goes for $489K (plus $600-700) in condo fees. That $299 lacquered nightstand doesn’t seem expensive after all; it is either that in my $1,400/mo 700sq ft apartment or nothing in a $220K 400sq ft studio. Hmmmm…

  35. korinthe says:


    It’s hard to consider a house a good investment in the Boston market, since we will probably stay put for decades rather than moving to a cheaper part of the country before the bubble deflates. When I moved up here in 2002 the market was too hot for a recent grad, and paying off my debt was a MUCH better investment. Besides I had no down payment. :)

    We are saving for a house, slowly, but in the meantime we (2 well-paid engineers, no kids) are spending money on experiences. Going to see other parts of the country, and every so often spending money on good-quality gear that we already know will get used. We don’t run out and buy gear for a new hobby; we make do until the hobby sticks.

    The furniture is not the greatest, if that answers your question. :) I haven’t gotten over the sticker shock of “real furniture” yet.

    Philosophically, we have been focusing on “how much, and what quality, is good enough for US” questions. This applies to time as well as stuff. The goal is simply to be happy with our choices.

  36. Chris says:

    “Our parents didn’t “give us everything.” I’ve held some form of a job every day of my life since I was 16. I’ve always had to work for stuff. I worked to pay every single dime of my $10,000+ computer rig. I made car payments on my car. I paid for my own food in college. Etc etc.”

    Yeah, yeah, etc., etc. for sure. Dude, many people have worked every day of their life since they were 16 and don’t have what you’ve been able to have because of your parent’s wealth. So many other people in this country have worked “every day of their life” since they were 16 to put food on the table, pay the rent, cover health care costs. Your “work since you were 16” is a luxury, not a hardship and certaintly not anything that entitles you to the privledges of the life you have now.

    The luxury of the life you have now is the luck of the draw of where you were born. An example of this being the benefit you have of even asking yourself the question of using your money for things or experience in the first place. If you were born to a family that could not provide for you, as I have been, then you would feel, in no time flat, the restraints of truly having to make it on your own without a support network to keep you comfortable. The restraints of where your money goes to pay all your expenses that have not been fully or partially subsidized by the people in your family. The restraints of actually having to pay off your education, your rent, your grocery bills and then to be able to buy the things that are at the level you can afford *without* their help (ie, an old car, no cell phone, you can’t eat out, you shop at a cheap grocery store, or god forbid, you have to use the foodbank like countless other “working every day of my life” Americans. See this week’s Seattle Times for an article on how many “working every day of their life” people without wealthy families are using the food bank on a regular basis.

    So, good for you that you aren’t one of the completely spoiled brats out there. That’s great. But please do not use the whole working every day of your life since you were 16 to prove some sort of strength through hardship story. All that food you bought while you were in college, I’m certain you could buy because your parents were in many other ways (through gifts, tuition, loans, etc.,) taking care of your basic needs. And it sounds like to some extent still are. And will continue to in the future, the second they kick the bucket, when yet another windfall will certaintly come your way.

    Still, you don’t have to feel bad that you have this privledge, although I believe that the excessive transfer of wealth through relation should be illegal, but using your “I’ve worked every day of my life” story as some sort of reason why you deserve your wealth and comfort is false. It makes you look arrogant and it’s an insult to people who have had to work to live, not to buy $10,000 computer equipment.

    The best you can do to rectify this situation is drop the whole working since I was 16 bs, recognize your privledge, and then give back as much as you can without asking anything (I mean nothing, no recognition, no acknowledgement, completely anonymous) in return to people who have much, much less than you.

  37. Nathan says:

    My wife and I have had this discussion many times ourselves. Live for today or live for the future? It’s obviously about striking a balance. You could be hit by a bus tomorrow, or live to be 115 — in either situation, you want have lived a life filled with happiness and comfort.

    I’m really surprised that no one mentioned the importance of compound interest. More important than buying a house is opening an Roth IRA as soon as you can and maxing out your yearly contribution. Your savings will grow exponentially, doubling every 8-9 years if you invest wisely. If you can start in your mid-20s, you should be a millionaire by retirement.

    My wife and I did something else that proved to be very important: we sat down together, added up all of our fixed expenses, looked at our non-essential expenses and decided TOGETHER how much of our income we wished to save each year. From that, we came up with a monthly amount that we were each allow as discretionary spending. The genius of this is that we made these decisions as a team, meaning that we both were both fully invested in making our new budget work. We checked our spending each month and helped each other stay within our limits by allowing one to “borrow” money from the other so that our overall spending stayed within our goals.

    The most important impact budgetting had for us was to help us identify and bad spending habits. Out went the daily $4 mocha from Starbucks; out went the $7 lunches from the sandwich shop by work; out went the $40/mo. high speed cable for the $15/mo. DSL line.

    We maxed out our IRAs again last year and put aside a hefty chunk in addition. But we also took three vacations last year, bought a home theater system and some nice stuff for our kitchen. We’ll buy a house eventually, when the market is more favorable, but for now we rent and live a happy life.

  38. Vickie Ranz says:

    I’m all for doing a little of both — spending a little, saving a little. Why not buy things (like the nightstand) now that you will use in your house later? Eat at home and save that money. Basically, do whatever gives you the most long-term bang for your buck i.e. buying the nightstand (long-term use and satisfaction) versus dinner out (short-term use and short-term satisfaction.

  39. MiddleGeek says:

    Like Vickie, go for both. Or more accurately, do both more efficiently. Don’t buy a new nighstand, go garage saling and find a cheapie that can be painted or refinished. Do it together as a project after work over a bottle of wine. Almost as nice as the new one, way nice than the milk crate but you culd probably do it for $20. (Plus you have the enjoyment of the project–an added benefit.) Want to eat out? Make food at home but again make it an event. Make your favorite food that you usually get at a restaurant. My GF and I recently made an amazing surf and turf for $60 that would have cost us over $200 at a restaurant. Sure you have the hassle of clean up but again work together. Have one person do some of the prep wotk and cleaning some of the dishes while the other concentrates on the main courses.

  40. MiddleGeek says:

    (((Continued from above)))
    Regarding the fishtank or whatever other room enhancmenets you might be looking at. Again, look for something used or something downsized. There are often tanks for sale at garage sales. Also, there are numerous small, plastic tanks which could make a nice brand new little setup including lights, filter, etc for under $50. Do you have certain fish in mind? I know a forestry student who bought a used tank and filled it with minnows and creatures from a local pond. It was a cool little ecosystem in his living room. Instead of fish, how about the calming motion of the lava lamp? (You never know!) Or maybe a terrarium with unique and flowering plants.

    Try opening your options and see if you can turn your want into a DYI project that saves you money and is a cheap event.

  41. If you know your income, you should be able to estimate how much you can save in a month. Use that to see how long it will take to save up your downpayment.

    Then you should be able to calculate how long it takes to get in the house at your current rate. If you can wait a bit longer than that, you should be able to set some aside each month for something like a fishtank (and the upkeep costs) or a nightstand.

  42. Roger King says:

    Real Estate prices have gone up very fast during the past few years, that makes the people who bought houses a few years ago feel rich now. It does not follow that the real estate will keep going up. So before giving up a rental and buying a house it is important to compare the cost of ownership vs the cost of rental and hence the implied appreciation of the house (if the rent is lower). If this implied appreciation is unrealistic, then buying a house right now may not make sense.

    Paying rent is not any more of a waste of money than paying interest on the mortgage or paying real estate taxes. While houses have appreciated in the past, it is not guaranteed to do so in the future. Look at what happened in Japan in last fifteen years.

  43. jim jameson says:

    Housing market is tanking big time. DO NOT BUY until 2007, or you will be under water. Houses are not an “investment”, that is just realtor talk that’s brainwashing the under-30 “bling” generation. The smart people sold at the top of the market and are renting right now. Inventories of houses are going through the rough, home sales are at a 10-year low. At the ARMs haven’t even begun resetting yet for most people. Renting is NOT throwing money away when there is a situation like right now where there is a huge disconnect between buying ($500K for a house) versus renting ($1200/month for apartment). Oh yeah, remember when I said don’t buy till 2007? I really mean, don’t buy until 2009, but most people scoff when I start out the conversation with that number. 2007 & 2008 will be a bloodbath for foreclosures, look for prices to reset to AT LEAST 2001 numbers.

    Do not be sucked in by the “bling generation” hype. People are buying $500K houses, Hummers, boats, Harleys, etc, and they don’t have a gold record on the billboard charts, or an NBA contract. They *DO* have mountains of debt and denial, which will catch up to them very soon.

  44. Ryan says:

    Well I would say the more money you save the faster you would be able to gather the amount required to buy a new house which will in turn save the rent of a few months you will need to pay for your existing apartment.

  45. Jeff says:

    I have owned homes and I have rented. Owning is better if what you own is affordable and is a back-breaker if not. Rule no. 1 – Buy a smaller house than you want, make it a duplex and lease the other half if possible. A house is not a status symbol – it’s a money pit – keep your money pit under control so you can afford the upkeep.

    Here are my life lessons:

    At every age: 1) spend less than you make. 2) don’t go overboard with things that go down in value (cars, furniture, electronics and other toys, etc.) or things with high price tags (even if they have the potential to go up in value). 3) Regularly invest whatever you can afford in mutual funds with a solid track record – especially if you are lucky enough to have a 401(k) with matching money at work – and don’t borrow or take the money out until you retire. If you change jobs, roll the 401(k) into another one if available or an IRA if not. Changing jobs is not an excuse to shoot yourself in the financial foot, keep the money growing. 4) Pay yourself first – repeat #3 monthly if not more often. 5) A pack of cigarettes or a latte a day will rob you blind – any habit that regularly costs money is something to manage or eliminate. ($2.50 spent per day for 20 years = $18,250. $2.50 invested per day for 20 years at 8% return > $41,750. for 30 years at 8% return > $103,000. And since you buy cigarettes and lattes with after tax dollars you have to earn more than you are spending in the first place. And let’s not limit this to cigs and lattes or anything you buy daily – the same principle works for any regular purchase. And be honest, you know you are throwing more than $2.50 a day away somewhere.) 6) stop watching TV commercials, even if that means cutting back on TV watching generally (advertisers know that you will buy more needless “stuff” the more you watch their sales pitches. You don’t need to buy a throw-away mop to clean your kitchen floor. The $20 spent on the mop, if invested at 8% over 30 years will grow to more than ten times that amount. Stop buying what they are pitching and you will have many $20 bills to grow ten-fold.)

    When you are young: 1) buy some disability income insurance if you qualify – this provides a source of income if you can’t work (half of all foreclosures and bankruptcies are health related. And get this: 1 out of every 3 thirty year olds will have a long term health related disability lasting more than 90 days and averaging 2 years between the age of 30 and 65. That’s why there are so many health related foreclosures and bankruptcies.) and make it a noncancellable policy (not just “guaranteed renewable”). And by the way, can you afford to go 90 days without a paycheck? How about the 2 year average without a paycheck? 2) buy some life insurance to give your family a break if you don’t make it to retirement. 3) stay away from credit cards unless absolutely necessary to borrow. 4) it’s not absolutely necessary to borrow. 5) it’s still not absolutely necessary to borrow.

    When you are older: 1) catch up on any of the foregoing rules as quickly as you can because you won’t believe this post until you’ve violated a couple of these rules and learned the hard way. 2) Relax and enjoy the trip – you only go this way once – and make sure you pay attention to your relationships and your health – they’re more important than any hunk of real estate owned or rented.

    Thanks for letting me preach.

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