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Remember the show The Jeffersons? If you’re super young you probably have no idea what I’m talking about. I’m not even sure if I watched the show when it actually aired, or if I just caught the re-runs. But, the entire premise of the show was about a family that came into money and bought a pie in the sky – AKA, a luxury home. Okay, it was a condo, but that’s just splitting hairs. 🙂
We’re all about living a frugal lifestyle and spending money only on things that we truly value. And we also think that same philosophy should go for you, too. That said, we do spend money on our home because we value it. And we don’t just value our home, we value real estate in general. So, if you happen to be chasing financial independence so you can move on up like George and Louise, keep reading.
Buy vs. Rent
Buying a home is never an easy decision. The decision to purchase or rent is a personal one with many factors that need to be considered. Think: Your job, your preferred location, family and friends, the list goes on and on.
There are no two ways around it, jumping in and out of homes after only a few years, will kill your equity and your bottom line. The transaction fees alone are enough to keep your net worth in the dog house. My suggestion is to rent if you think you foresee a future of moving around frequently.
That said, if your financial obligations are few and your net worth is something to brag about – not that you should – it’s probably okay to purchase a luxury home. And if you do, make sure you consider the essentials before signing on the dotted line.
Location, Location, Location
As many of you know, location THE biggest factor that will greatly increase the purchase price of any home. On the flip side, opting for a house in a less desirable location means you’ll pay less for the same house. It’s amazing the difference a few blocks can make. Anyone with experience living in a city can attest to that.
Considering the cost per location, it’s not surprising then that the location of your home could impact how easy it is for you to live and enjoy your life. Imagine opting for a luxurious home located 30 miles from work because the location meant a cheaper price tag.
Well, after you factor in commuting costs, you might as well have purchased the more expensive home close to your job. Over the course of years, it would’ve saved you money and time. Take it from someone who wasted a lot of time in early adulthood, it’s precious, and something you can never get back.
After deciding on location, you’ll want to determine how much space you need or want. And if you’re cruising along on financial autopilot after reaching FI, you now have the option to purchase more house just because you want it. Congratulations! You’re in a very elite club.
Along with location, space ranks right up there as an essential consideration during the home-buying process. When deciding on space, it’s important to think about how much space will make you happy. Maybe you’d be happy in a van down by the river – oh wait, that’s me! And if you’re interested, you can read all about our upcoming #VanLife.
Alternatively, maybe you’d be happy with a modern, yet rustic, home in the Blue Mountains, or maybe you’d be prefer an 8-bedroom ski cabin in Breckenridge, Colorado.
If you have the money – go nuts. You only live once and it makes no sense to not enjoy the fruits of your labor.
There’s no arguing this point – the amount of space your home has will increase its value. Price fluctuations can be incredible when you start tweaking locations and space. This is where determining your values and a price point you can be comfortable with are essential.
For example, having a small home or condo in a city like Boston can cost substantially more than a large home in the country, like those offered by Sweet Grass. Sweet Grass is a luxury home community nestled in the Blue Ridge Mountains of North Carolina. If that sounds as dreamy to you as it does to me, here’s there link so you can check them out: http://sweetgrass.com/.
Other articles you might enjoy:
- We Made Our Dream Home A Reality
- Buying A House? Due Diligence And Gut Instincts Matter
- Investing In A Vacation Home: The Pros And Cons
- Why We Include Our Home’s Value In Our Net Worth
- Why We Love Being At Home
- F.I.O.R. – Financial Independence Optional Retirement
Do Your Research
Word of caution, if you haven’t yet reached financial independence and you know you need or want a nice, big home in a well-manicured neighborhood, you might want to continue to rent until you can buy the home of your choice. Buying a home early in life can result in purchasing a less than desirable home that you’ll want to upgrade in a few years. Don’t waste your money.
And, renting isn’t a bad thing. In fact, a lot of people prefer it and don’t ever want to buy a home. But if you have your heart set on a house, there are plenty of online resources to help you reach your goal, like these… https://www.moneyunder30.com/save-downpayment-house and https://www.nerdwallet.com/blog/mortgages/buying-a-home-saving-down-payment/.
Don’t be too hard on yourself if you’re renting and don’t want to be – give yourself enough time to make the right decision. Your future self will really appreciate it.
Mr. MMM and I are choosing to stay in our small, amazing home for now. But when we hit financial independence, we’re giving ourselves the option of a home upgrade. Will we actually do it? We’re not sure, but it’ll nice to have the option.