STARTER HOME – KILLER REASONS TO KEEP YOURS

March 15, 2017

There are few things in this world that make such a screaming statement about the person you are (or want to be) other than the home you live in or the car you drive. These two high-ticket items allow you to shape the perception others have of you without having to utter a single word.  For the purpose of this analysis, we’re going to focus on your starter home.

Let’s face it, your house is THE LARGEST TANGIBLE ASSET you own, so you better make it count, right?

Wrong!

History is a great predictor of the future; therefore, past historical behavior is a great predictor of future behavior. When it comes to tradition and purchasing real estate, Americans have a collective behavior over a standard lifetime that goes something like this…

  1. Get a job
  2. Buy a starter home
  3. Get a better job
  4. Up-size that starter home
  5. Retire
  6. Downsize to a smaller home (Hint: You could’ve just stayed in your original starter home)
  7. Die

However, just because this is the traditional path and you could take it, you might want to think long and hard whether or not you should take it. Think for a moment about skipping #4 and #6 – now consider what that could mean for your finances over the course of your lifetime.

I’m lookin’ at you, Generation X – the generation living large in upgraded homes with little in the way of savings for retirement. Uh huh.

Related: How We Almost Committed Financial Suicide

Starter Homes Don’t Have To Be Small

We decided to stay in our starter home after much debate. #bestdecisionever

Just to be clear, the term starter home often makes people think of smaller homes and townhouses – that is not necessarily true. Size really doesn’t matter here.

Despite the size of your first home, it’s safe to assume that if you’re thinking of selling it and buying another one, you’re most definitely going to trade it in for one that sports a bigger price tag. After all, you get what you pay for, right?

Unfortunately, a bigger price tag means BETTER in the minds of most people. That is sometimes the case, but it is not a universal truth. There are many homes with reasonable price tags that can be whipped into HGTV-shape with a little elbow grease and some imagination.

Side note: If your arms aren’t broken, you can probably do a lot of repairs and upgrades on your own, effectively saving yourself a crap ton of cash. Invest the difference and you’ll be sitting on a big chunk-o-change down the road.

Related: How We Almost Committed Financial Suicide Again

Reasons You Might Want To Trade Up

Even if you’re not increasing your square footage, you certainly have valid reasons for wanting to trade up to a better house. Those reasons usually fall into one of the categories I’ve conveniently listed below.

  • Space
    • Your house is just too small for your ever-growing amount of crap.
    • You need room for out-of-town guests – because you should definitely be buying more house so your relatives and friends have somewhere to crash when they occasionally come through town.
  • Kids!
    • You have kids or you plan to have kids and they all must have their own bedroom. Other useless rooms you require include a playroom and a home office, neither of which is necessary for most families. Just sayin’.
  • Updated
    • Instead of updating your starter house, you want to just start over and pay more money to have a home that is already updated.
  • Validation
    • You want to validate your successes by making a statement without uttering a word. You want the world to see where you live and know you’re a success.

Related: One House, Two House, Red House, Blue House

Mo’ House Mo’ Problems

Trading up often means you’re increasing the footprint of your home. Beware. We’ve all heard that old saying… mo’ money means mo’ problems. The same holds true for bigger houses. A bigger house will cost you in terms of money, time, and aggravation. Besides, someone has to clean all those toilets, cut the lawn, re-surface the driveway, and on and on and on…

Related: We Made Our Dream Home A Reality

Killer Reasons To Keep Your Starter Home

Mad Money Cat is keeping her starter home.

…which brings us to the whole point of this article. So, pay attention!

Problem: If you’re going to up-size your starter home, you’re probably also going to downsize that “better” home at some point.

Hence, the vicious cycle of home ownership comes full circle. Buying and selling multiple homes when it’s avoidable (think: you’re buying and selling homes in the same area) is a terrible drain on financial resources.

Fortunately, there are some pretty easy alternatives.

Solution #1: Keep your starter home and remodel/upgrade it to be your ideal home.

Solution #2: If you insist on wanting a bigger/better house, just wait until you can afford THAT house and skip the starter house altogether. In essence, your better house will also be your starter house.

Here, I will counter all the reasons for trading up in the first place. If you’re on the verge of trading up, get ready to resist my Killer Reasons To Keep Your Starter Home! Here we go.

Here’s The List!

  • Space
    • Is your starter home really that small? Maybe you should consider home sizes across the globe and realize how fortunate you actually are. You could also consider getting rid of your crap. Ever hear of minimalism? You don’t have to go full-blown minimal, but a little minimalism never hurt anyone!
  • Kids
    • Kids don’t need more space.
    • YOU are the one who wants more space for your kids.
    • Your kids just want your time.
    • Bigger houses separate families.
    • Kids grow up and you’re left with a big empty house.
  • Updated
    • If your starter home isn’t updated the way you’d like it to be…update it! This is pretty easy. It is almost always less expensive to update a home than it is to buy another one.
  • Validation
    • Try not to focus on external things to validate your successes. Instead, focus on the person you are and the person you want to be, regardless of your possessions.
  • Money 
    • You will save massive amounts of money if you don’t do the real estate shuffle. Transaction fees alone could run into the tens of thousands of dollars, if not more.
    • On top of transaction fees, there are increased insurance premiums, property taxes, maintenance costs, higher utility bills, etc.
  • Time 
    • Time is money. The time you spend maintaining a bigger/better house means less time you can use for other things. Things like creating more income, nurturing your relationships, and spending quality time with your children. Don’t forget, those children are growing up and getting closer to moving out every single day.
    • Time is fleeting.
    • Time is precious.
    • Don’t trade your time with loved ones for a better house to impress people you barely know.

What are your thoughts on starter home ownership? Is it worth up-sizing your starter home just to downsize it again later in life? Give us your thoughts in the comments below!

 

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27 Comments

  • If you can keep your starter home and rent it out, then it’s a great idea! Otherwise, it might be wise to not buy/sell due to transaction costs!!

    Nice looking site re-design. Must have been a lot of work… I’m doing the same thing today with a buddy of mine. Will be fun!! 🙂

    Reply
    • I totally agree. In fact, I just suggested one of my friends do that very thing. They had never even considered it before and it makes way more sense to do that than just sell it.

      Thanks for the compliment on the site. I have been working my butt off. It is a ton of work. At least you have a buddy to help out 🙂

      Reply
  • Love this article! Here’s an interesting thing we just discovered, I’ll even use our real life numbers:
    We bought our home for <$200,000 less than 10 years ago, a very similar home just went up on street and is listed for $350,000. When we're selling this is great news, however, it means that unless we're going significantly upscale we'll be doubling our current mortgage with the only benefit being an updated home.

    I'm so grateful ML got on board with staying put as home pricing in our area is getting crazy and even the 'downsizing homes' are really quite expensive.

    Reply
    • That is so awesome you guys decided to stay in your current house. Congrats on that appreciation. Wow!

      Reply
  • I never liked that term “starter home”. It seems to have such a negative connotation. It’s sort of like calling someone’s spouse/girlfriend/boyfriend a “stand-in”.

    My starter home is the one I’m in now and it’s my first home. And we are most definitely looking to downsize. I don’t consider myself to be a huge minimalist but why on earth would I want a larger house to clean?

    Reply
    • Yes! We have decided to stay in our starter home and just upgrade it. I can’t imagine having more toilets to clean. No thanks to a bigger house!

      Reply
    • I’m with Mrs. Groovy; I hate that term! It’s so condescending. “Oh, what a lovely starter home!” Well, what if I intend for this to be my long-term home-home? It’s not good enough for that?

      The most important feature of a house to me isn’t size or fanciness; it’s location. It blows my mind seeing those TV shows where people choose to add an hour to their commutes just to have an extra bedroom. For me, that would be a completely backward decision in terms of what drives happiness.

      Reply
      • Well said! At one point, I had one of those long commutes (1.5 hrs one way!) for almost 3 years. Not because I wanted an extra bedroom, but because of a relationship – still stupid in retrospect. But, I agree, location is way more important than size. Where are you in the world these days?? 🙂

        Reply
  • Love that piece of advice!! Totally agree with this philosophy…now if I can get my wife off redfin and window shopping homes every other night, I’ll be able to sleep more peacefully.

    Reply
    • Hahaha…I do the EXACT same thing. I actually LOVE real estate and it was a tough decision for me to stay in our starter house – I’ve embraced it now – but it took a little convincing in my own mind. But I still like to look 😛

      Reply
  • My grandmother’s sage advice (Depression Era) was, “Never buy all the house you can afford, or all the car you can afford. Only buy the minimum.”
    This has served me well in my lifetime.

    Reply
  • I’ve been enjoying a lot of your posts lately, and thank you for sharing this one.

    We ended up going for the “wait until you can afford the starter home that you can stay in forever (if you wanted to)” plan and have been loving it. That whole delayed gratification thing comes back around.

    Solid post with some great points. Thanks for sharing!
    -Mike

    Reply
    • Thanks so much, Mike! We stayed in our starter home and it’s one of the biggest reasons we’re able to pursue FI. 🙂

      Reply
  • I’m with Matt. Location should be a key component. As of right now, the only reason I could see us selling our “starter home” is to be in a better location that’s a bit closer to work (I bike to work) and with a better community.

    Reply
    • I also agree. If work dictates, selling the starter home for a different location could be the best/only option.

      Wow, you bike to work! That’s hardcore. Two thumbs up!

      Reply
  • Thank you for putting this into words. Buying a house was such a stressful, unpleasant process and I NEVER want to repeat it. So I fully intend to die in this house surrounded by cute dogs and furniture I made myself.

    Reply
    • Ha! I love it. I love my house, too. And I can totally imagine dying there with my furry friends. We are so on the same page 🙂

      Reply
  • Love this article! It seems that often times people rush to buy a house and then move because it’s “not big enough”. I’m glad we were able to void this. It feels good to know that our “starter home” can be our “forever home” if we want it to be. The only reason I could see moving as of now would be if we needed to move to a better location.

    Reply
    • I (obviously) completely agree! The idea of hopping in and out of houses when it’s not necessary for a job is ridiculous. The transaction fees alone can you.

      Reply
  • Another scenario: we kept our starter home and rented it out. In 3 years it will be paid off and a source of passive income which we’ll use to pay down our current house.

    Reply
  • Absolutely! For us, one of the best decisions we made to get to where we are at was . . . to stay in our first home. Not only did it allow us to save; it also helped hold off debt. Still relatively young (40s), we’ve built alot of equity in our place, which also leaves freedom to consider looking ahead to a home for retirement . . . Great stuff.

    Reply
    • You sound just like us! Yep, we love that we made the decision to stay put. We are thankful everyday that we don’t have a huge house with huge bills and huge maintenance. We’d rather spend our time and money elsewhere!

      Reply
  • Great read, I didn’t like the idea of buying a starter home plus I hate the process of moving lol But I’m saving now for my forever home even tho it might be a little extra it’s worth it in my eyes.

    Reply
    • Thanks! I absolutely agree that buying one house – if your work schedule and family fits – is much better than jumping in and out of real estate throughout your life based on changing needs.

      Originally, I purchased our family home as a future rental property. Because of that, it has a smaller footprint than I would have purchased had I realized I was buying our forever home. Fortunately, we were able to finish the basement and do some renovations that have turned it into our dream home.

      Good for you for setting your sights on the home you actually want from the beginning!

      Reply
  • Oh my gosh, that was exactly what I needed to hear. We can make our smallish 3/2 work with a 2 year old and twins on the way. We can! It’s got a great yard and that’s worth a lot these days. Thanks for throwing truth darts into my soul!!

    Reply

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