When we bought our house five years ago, we assumed it would be a starter house, and that we’d need a bigger home when we were ready to add to our family. We browsed real estate fliers from time to time and wandered through the neighborhoods with bigger houses, but never seriously considered moving, and I’m so glad we didn’t. Our baby is due in seven weeks (!) and we’ll be happily nesting with our new addition in the same place we’ve called home for the last five years.
The houses that we were considering a couple years ago were generally in the price range of the high 200s to low 300s. We bought our house for $190,000 and our mortgage payment is fixed at $1070/month (including taxes and insurance) plus a HELOC payment that was $136 last month. Let’s say we had sold it and managed to come away with $20,000 at closing to put down on another house. If we had bought a $300,000 home and financed $280,000 at 6%, the mortgage calculator I used came up with a monthly payment of $1678, which does not include taxes and insurance. That’s nearly $500/month more than we pay now, plus whatever the taxes and insurance would be on the bigger house. FOR THE NEXT 30 YEARS. Even if rates were to drop and we could refinance a few years down the road, the mortgage payment would still likely be significantly more than we pay now.
Last year, we converted a large second living room into two smaller rooms, one of which is now my husband’s office. This gave us a spare bedroom for a baby. We’ve spent the last few weeks remodeling our kitchen (it’s about twice the size it was before, with newer appliances and tons of counter space) and replacing the flooring in our upstairs. On all the projects combined, we’ve spent less than $5000 (probably more like $4000, but I’m leaving room for unexpected expenses that could still arise).
I know that our house is not as fancy as the $300,000 homes we were once considering. But the renovations we’ve done have given us everything about those homes that we needed – more bedroom space and a bigger, more useful kitchen. I like knowing that we’re living simply in a space that suits our needs, rather than stretching our budget to chase the “bigger is better” mentality. I’d much rather spend a few thousand dollars to make the place we have right for us instead of spending several hundred extra dollars every month for the next 30 years to have a bigger house.
I honestly think that our decision to stay in our first house will put us further ahead financially than any other frugal choices we’ve made. Driving older cars, shopping in thrift stores, eating at home – they all make a difference, and the little things do add up. But when I look at the amount we could be spending our our mortgage if we had upgraded our house, it would have wiped out most of the gains we make by living frugally day to day.