We’re grocery shopping the other night and this woman behind us had fake nails, fake blond hair and a pedicure with an oddly shaped tattoo on her naked foot. She kept gabbing loudly on her cell phone while our groceries were being rung up. She didn’t have as many groceries as we did so it wasn’t surprising to run into her again in the parking lot. Guess what she was driving?

A Hummer.

Looks can deceive and maybe this woman was well off enough to buy a fleet of Hummers and not have tomorrow impacted, but I couldn’t help thinking that she’s the type of person who is living and leveraging their buying power today and forgetting about tomorrow. You know the cliche: live for the moment. Hey, I can get with some of that thinking, not spend all your good hard working years working. I buy toys. Just read this blog for awhile and you’ll see I buy plenty of toys.

Maybe our family isn’t today’s average family in that we live in a rambler and not a new home development so close to our neighbors that we can hear their television or stereo playing through the walls. My neighbor and I were talking and wondering how the developers can get away with building houses so close to each other that fire literally can jump from roof to roof. Firewalls help walls not roofs.

And then this morning I’m reading this Yahoo Finance article by David Crook which challenges the notion that your house isn’t your greatest asset and has the following chart inside it.

I like charts but the numbers on this one are way out of whack for our real world family situation. Ok, it’s using numbers from today not when we bought our home (1994), but still they seem on the high side. The cost of owning an average home over 30 years is over a million dollars?

Let’s look at the source: Office of Federal Housing Enterprise Oversight and then do the math.

Purchase price of a typical single family home: $290,000
We paid less than $100,000 in the early 90’s for our home which is kind of tight as our kids have grown into teens but still works for our family of five. The house next door to ours, not a corner lot like ours and a little smaller, just sold for $219,000. We both have a nice view of Mount Rainier on a clear day. We don’t have any covenants to deal with like a lot of these new house developments. We both have decent-sized yards. If we bought a larger house in a development it might cost $290,000 or more, but can we all agree that it’s largely personal choice where and what to buy?

The fine print on the chart indicates the national median price of homes is $221,000. So right away you can throw out almost $70,000 for being a selective and/or bargain shopper. For choosing not to live in the very new housing development or upscale neighborhood you could get a bigger yard for your kids and skip the annoying homeowner association contracts. Luxury has its price.

Not saying there is anything wrong with living in a new house. Buy land and build your own house so you don’t have neighbors close enough to touch. Literally. It’s not that I’m a new house development snob, I don’t understand why anybody would ever want to be that close to their neighbors unless the house is an outstanding buy. I understand and agree with buying houses that are good deals — even in new home developments.

If we’re going to live that close to our neighbors, and some day we probably will again (yearning years most likely), then why not go all in and get a condo? Then you get everything taken care of outside the walls.

If you live in one of those new house developments I’m describing than tell me honestly in the comments below if you enjoy being that close to your neighbors? Or was it a killer buy? Again, I understand good deals and I’d buy a house in a new development too if it was a crazy good deal.

Down Payment $58,000, principal: $232,000
How many typical single families put down $58,000 on their home these days? I doubt very few first time home buyers anyway, maybe this means those rolling equity from prior home sales. We put down a little more than $10,000 when we bought our home.

I’m seeing signs advertising “$500 down” to get into brand new homes. We all know the more you finance, the more you’ll have to pay and a 30 year mortgage — and now in some cases they are doing 40 year mortgages — you’ll pay a hefty amount of interest the more you borrow.

Interest 6.41% total = $291,000 (after tax: 33% bracket)
Shouldn’t the goal be to buy below, not above your means? Decide upon a monthly amount that is not only in your budget but allows you to pay more against the principal and reduce the amount of interest you’ll pay. If you get into too high a payment and/or the interest rate is lousy you can’t pay more than the minimum payment and that means you pay the maximum amount of interest in the loan. That’s not a wise way to pay off debts.

Taxes and insurance:$6,000
$500/month for a taxes and insurance? Not in this area anyway. A high quality homeowner’s insurance policy for a $290,000 home will cost less than $1,000 unless you add earthquake and flood coverage. Property taxes could be as high as $3,500, but $5,000+ is pretty steep. That leave $1,500 a year. Again, it’s all about where and what you buy. If you buy a house in an upscale neighborhood or waterfront property, naturally you’ll pay higher taxes. Insurance is based on the value of the home and where it’s built doesn’t change the cost of raw materials to rebuild the home. I question if the $6,000 figure is accurate on an average basis.

Maintenance: $300/month
$3,600 a year? I call BS on this one too. If you are buying a new home for that $290,000, what maintenance is there? Home warranty plans are available from places like Sears for $500 a year that cover repairs like water heater breakdown. If you have animals inside (personal choice) you’ll need to get new floor covering more frequently. Paint and drywall aren’t that expensive.

Outside? Roofs should last 20-30+ years. That’s probably the major repair/upkeep expense for a home, isn’t it? Mowing a tiny patch of lawn? Come on. Maybe if you have a professional gardener it costs $300/month, but I’m not seeing maintenance costs over 30 years costing anywhere close to $108,000 unless you party like Animal House.

Our family of five has wore down our home and $20,000-25,000 would make it look very new again (new carpet, linoleum, paint, doors, cabinets, gutters). By the figures stated above we should have nearly $40,000 to spend and over the course of the full 30 years? $100,000 and, well, we could add on an in ground pool in the back and another bedroom to the side!

But wait, I’m getting ahead, there is another expense for major repairs and improvements.

Major repairs and improvements: $300,000
Who spends $290,000 buying a new home and then puts another $300,000 into it? Really. Does the average family do this? Maybe if you want to build a shop onto the property, but who has the land for that in most new home developments? I guess our family is from outer space because it’s unlikely we’ll spend anywhere close to the original purchase price of the home on major repairs and improvements. If there is a fire or a tree comes through the house, that’s what we have insurance for, that’s not coming out of our pockets.

As for improvements? Maybe the Federal Housing Enterprise Oversight thinks most people will spend more than the purchase price of their home adding features.

You rarely get the money in value out of adding new things to your home. Spend $5,000+ adding a jacuzzi? You do that for comfort and enjoyment, not because it’s going to raise the value of your home by $5,000. Add central air conditioning or solar panels? Again, that’s not going to increase the value of the home by the amount you’ll spend making the improvements.

Back to the grocery store fake blond
If only more people would buy below their means instead of above them.

There is a terrible affliction in society with money, prestige, fancy cars, fancy clothes and [gasp, looks at self] fancy gadgets. Look, it’s one thing if you are wealthy and can truly afford these things without negatively impacting your yearning years — hey, more power to you — but a lot of people buying these things aren’t wealthy and are spend far above their means. VISA and Mastercard love is like hugging a thorny rose bush.

You know what I think of as financial success? People who retire when they are still young enough to enjoy life, who don’t need to take a penny from the government, live in homes that are paid for, and elect to live on a budget.

As mentioned in 7 guidelines for a better and future life I believe a happy life isn’t about money. It’s about the choices we make in life. More good choices than bad, less purchases for things we can’t truly afford than more equals a happier life.

We are trying to leverage our earning years so we can live comfortably in our yearning years. Believe me, temptation is out there, but we’re still being patient out there shopping for that elusive $10,000 car. We could splurge for a Mercedes or a Hummer but I think Hummers are gaudy. I think Mercedes are great built cars so maybe someday on that one. My wife could go get her nails and hair done every week if she wanted. We could go out and buy a much bigger and brand new home. None of these things would hurt us financially now, but they would take money away from what we’d be saving for tomorrow.

It’s definitely more fun spending than saving. We’re happy to give up a little bit more fun today for tomorrow. Are you?

Did this post make you go hmm?

Related Posts

• Sexist men vs. women parking game
• Study finds hands-free cell phone drivers are still impaired
• Combat cell yell with cards
• IntelliMeter resets parking meter when car moves
• No skateboarding in the water!
• Fake tree making its last stand