I’m running an informal book club devoted to All the Money in the World here on this blog. You can start at any point; there are links to previous weeks at the bottom of this post.
This week we’re talking about Chapter 4, “Laughing at the Joneses.” In this chapter, I look at the American Dream of home ownership, and specifically, the big suburban house with 2 cars and a yard. Most people seem to want such things, and so it’s worth looking at whether these widely desired goods make us happy. (If you haven’t bought the book yet, you can cheat this week! There’s a long-ish excerpt from Chapter 4 available for a free download from 800CEORead and their “Change This” manifesto program. Follow that link to get it).
This topic definitely became more personal for me over the last year. In early March of 2011, my husband and I decided to start looking at homes in the Philadelphia suburbs. We’d been living in New York City for years, but we didn’t have to live there, and there were starting to be some good reasons not to: the desperate hunt for a kindergarten slot I saw friends going through, NYC’s tax rates, the third child we’d recently learned we were expecting. When we visited friends with homes, our kids had lots of fun playing in basements and yards. So we decided to start looking for basements, yards, and good public schools, and within about 6 weeks, we’d closed on a lovely home in Gladwyne, PA. Within a few months, I’d bought my first car, and this spring we decided not to renew our lawn service contract, so now we’re dealing with our sea of green too. (Actually, not too vast a sea. One of the attractions of this house was a lot of professional landscaping involving ground cover of plants that grow well here. We barely had to water last summer).
As a long-time NYC resident, I had some worries about moving to the ‘burbs. I’ve liked it more than I thought I would for a few reasons. First, we live near “downtown” of our little village, and can walk to a grocery store, post office, ATM, library, hair salon, coffee shop, my son’s preschool, etc. I don’t need to be in my car to leave the house. Second, we live a mere 15-20 minutes from downtown Philly. I love that we can go to some hip restaurant, then hop in our car and be in our house with a yard near several nature trails 20 minutes later. This is really hard to pull off in NYC. And speaking of NYC? Well, I go back pretty frequently. I get in my car, drive to Philly’s 30th street station, and take the train. It can be a 2-hour door to door trip. And when I go, it’s like I’m in NYC as a 23-year-old again, not trying to cram my double stroller into the back of a cab.
It turns out you can buy a lot of train tickets and nights in hotels for the difference in cost of living.
But anyway, writing a book about money made me think a lot as we were buying the house and then getting used to our new and more rustic Pennsylvania home. Having read Sarah Susanka’s Not-so-big house books (thanks to recommendations from blog readers), I was more aware of things like design vs. sheer square footage. We avoided houses with huge marble entryways. No one except the pizza delivery guy is going to use the front door anyway. Often, moves to the ‘burbs mean longer commutes, but not in our case. We made sure to buy near things we’d use. I love that taking Jasper to school can be an 8-minute project. We bought in a down market, and didn’t buy into the various online budget calculators of how much house we could afford. That frees up cash for other things.
“The Joneses” are a powerful factor in our mental lives. What I mean by laughing at the Joneses is spending less on positional items (housing, cars) so you can spend more on other things: experiences, charity, hobbies, or just not having to work as much. It means knowing how miserable a commute can be, and not trading off an extra bedroom for an additional 10 minutes every weekday morning and evening of your life. It means knowing that the big lawn means either more time spent caring for it, or more money out the door to pay someone else to do so.
The question for this week: what kind of advice would you give to a young couple shopping for their first home? What do you like about your home, and what do you consider a trade off — maybe one you’re not thrilled with, or one you’re dealing with because of a larger goal?
Previous weeks:
ATM Book Club Week 2 (Chapter 1)
ATM Book Club Week 3 (Chapter 2)
ATM Book Club Week 4 (Chapter 3)
photo courtesy flickr user srqpix
My number 1 piece of advice: thing long and hard about the commute, because that is going to be a big part of your life. We sort of did this- we ruled out some nice areas that were just too far from the area of town we both work in. And we sort of lucked out- choosing a smaller house that has a better commute over a larger one not too far away mostly because we liked the neighborhood the smaller house was in more. Looking back, the extra 10 minutes that other one would have added to our commute should have ruled it out, anyway. Time spent commuting is time that is not spent with the kids. My shortish commute (30 minutes in full rush hour traffic) is what allows us to do family dinners.
Of course, the problem is that the commute doesn’t necessarily stay fixed. My company is relocating next year. My commute will get longer, and there is nothing I can do about that now. But again, we got lucky because we bought in a fairly central location. My commute will still be on the short side for this part of the world.
@Cloud: That is good advice even if commutes don’t stay fixed (I seem to recall some study finding that the vast majority of relocations involved making a shorter commute for the CEO). If you’re never home it really doesn’t matter how awesome your house is!
This is smart advice. Also, if you live in a town with a few major employers, your house may sell easier if you are close to one of them (and retain its value better as well). So far that’s held true for us, and we live walking distance from my job (which employs about 25K people at the site closest to our house).
@ARC- of course, if one major employer goes out of business and that’s the one you’re close to… I’ve been thinking lately about a few one-major-employer areas. If that company is acquired or closes, not only are people out of their jobs, no one’s going to be able to sell their homes. Messy business. I guess that’s another reason not to stretch too much to afford a home. You want to be able to afford it even if something goes wrong and you can’t unload it.
I definitely concur with Laura here. As non-urban folk, we wind up being dependent on an employer. It’s a compelling reason to pay off your house.
Yeah, that’s definitely something to watch out for. I wasn’t saying it should be justification to buy more house than you can afford, just that all other things being equal…
Luckily where we are, it’s a big enough city that there are 3-4 BIG employers and a ton of smaller ones in the same industries and our city isn’t that spread out.
I concur with Cloud on the possibility of the commute changing or becoming much longer, due to either a decision to change jobs (promotion, bad boss) or a forced change (layoff).
Another factor is how spouses view the commute. My preferred upper limit was 20 min; I compromised on 30 and we wound up with ~20 min. My husband started working in a large nuclear plant, where everyone HAD to live at least 30 min away and which was surrounded by desert. He liked the drive and time to decompress. (Traffic is NOT like NYC)
An obvious additional factor is how many children you plan to have- we bought a 3 bedroom house as a newly married couple, because we hoped to have children. We just didn’t use the spare bedrooms much the first few years. It was still cheaper than switching houses.
@Twin mom- it is hard to have a crystal ball on the number of children. What I’m always curious about is people buying much more space than they are likely to ever fill in the fertility department. I think that’s why even very large houses are billed as “5 bedroom” when other rooms could clearly be bedrooms. You can get your head around 5 bedrooms with 2 kids (1 for parents, 1 for each kid, a guest room and a home office). Past that it’s just space. So they call rooms things like “video library.”
At least where we’ve lived a “bedroom” has to have its own closet. So our “study” doesn’t have a closet, but all the bedrooms do.
We are running into this problem now – our house has 3BR and it’s not quite enough now that we’re expecting kid #2. I’ve got to move my craft room into the weird bonus room addition thing that we use for indoor/outdoor dog space 🙁 First world problems, I know.
@ARC- I feel like Real Simple must have done a feature on just such an organizational issue: where can I put my craft room now that I’m expecting another baby? I bet it features a fold-up desk or a closet that opens to reveals doors and a table or…
Thanks Laura! I’ll look out for it. Problem is I have way more stuff than will fit into one of those convenient closet thingies 🙂 But that’s a personal problem. I’ve been meaning to go through it and give away/sell the stuff for crafts I’ll never get to, like sewing.
“What I’m always curious about is people buying much more space than they are likely to ever fill in the fertility department.”
We did this. After living in cramped apartments for years, we didn’t realize we’d miss each other if we each had a separate home office. Though it is nice having a library…
Next house will probably be a 3 bedroom if we ever move. We don’t need an entire guest room suite.
Yeah, we originally thought my husband would put a desk in the guest bedroom. Instead, if we’re both working at home, we tend to work about 2 feet from each other, in my office. Just like old days…At least the bed is no longer right behind my desk.
You guys are making me feel better about our “cosy” shared office/guest room!
Our guest room suite just sits there collecting dust until we have guests (then we clean it!) I try to use the bathroom from time to time to make sure everything is still running. But yes, most of the time it just costs money to air condition. Well, that and the cats like the bed in there.
Now, it might get more use if we lived in San Diego– for some reason we get a lot more visitors when we’re living nicer places!
@N&M- we have actually wound up using the guest bedroom for about 50% of the nights of our first year in this house. Lots of visitors. Which is a good thing! That was one of those marginal rooms – unsure if we needed it — but has been useful, and is an option-play on family size.
Before we lost our guest room to BabyT, we also used it for:
1. Non-sick spouse to sleep in when other spouse is really sick
2. Closet to store off season clothes, motorcycle gear and vacuum cleaner, etc
I miss having a guest room. We literally can’t have anyone to stay over unless they want to sleep on a futon in the living room, and have dogs bugging them to snuggle.
A tip would be to not take too large of a loan out. Don’t count on future raises in order to help offset your monthly mortgage payments.
We bought a house at the VERY young age of 20. We researched a lot, and are very happy with our decision.
@Michelle- congrats on buying a house so young! Yes, the loan thing is tricky for people because it makes perfect sense that you’d be earning a different amount 15 years from now (or 30, as the case may be). But raises and continual employment are certainly not a sure thing. I guess the advice should be buy what you can afford now, and hopefully, in a few years you’ll be earning a lot more and be able to put that cash to all manner of wonderful things (savings, travel, etc.)
My husband and I have lived in a townhouse for 12 years. We LOVE it!! We also have 2 children (ages 6 and 7). We live in a midwest city. For the most part, other people are SHOCKED to learn we live in a townhouse AND have children there. Not the norm in the midwest. We have plenty of space (2200 sq feet). We can walk so many places – hair cuts, dentist, church, grocery, bank, library, etc… We wouldn’t trade our home/neighborhood for anything.
Although our children can’t play in a traditional yard, they are able to ride their bikes year round in our basement/garage. Since they can’t help with yard work, we are extra vigilant about them doing chores in general. I suspect they do more chores than most children in their age group. I bet we spend more time playing outside than most children too – again to make up for no yard (we use local parks).
One last wonderful thing about our townhouse…..it’s gone up in value since our purchase in 2000.
No thanks to the McMansion!!!