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.
Michelle Dawn says
I think you made a good choice. I’m all for living in a smaller home. They cost less to heat and maintain. Plus you end up with too much stuff in a larger home. Smaller homes force you to think carefully about what you buy.
Emily says
Ditto to Michelle Dawn.
Once you live smaller you know it’s better than those big houses for so many reasons.
You made a wise choice!
April says
My aunt and uncle built a HUGE home, and it’s just the two of them, plus my grandparents, who basically live in an attached condo. It’s a gorgeous house, but so big for two people. My fiance and I bought land and plan to build in a couple of years, but we want a cozier home with potential to add on later. I figure that even if our salaries go way up, I’d rather use the money for travel than on a house payment.
Carla says
My hubby and I along with our 9 month old daughter (and lovely kitty) live in a 2 bedroom, one level condo. A year ago I would have told you we would be looking for a home around this time. Now that we’re so much more focused on our finances we realize that would be the dumbest thing ever!
I think people get way too caught up in the idea that size and space equals something or says something. I told my husband I’m perfectly happy having one or two more children here and he agrees. I mean, don’t people in places like NYC raise big families in small spaces all the time?
It’s nice to know that not everyone is obsessed with getting a bigger a house.
Carla says
My hubby and I along with our 9 month old daughter (and lovely kitty) live in a 2 bedroom, one level condo. A year ago I would have told you we would be looking for a home around this time. Now that we’re so much more focused on our finances we realize that would be the dumbest thing ever!
I think people get way too caught up in the idea that size and space equals something or says something. I told my husband I’m perfectly happy having one or two more children here and he agrees. I mean, don’t people in places like NYC raise big families in small spaces all the time?
It’s nice to know that not everyone is obsessed with getting a bigger a house.
ps. this is Mama Hearts Baby, I decided to start my own PF blog…thanks for the shout out on the blogroll!
Steve says
You made a wise choice. Always buy less house than you can afford. If you ever buy another and rent out the one your in it will help you sleep better at night. How much is saved by keeping cars say 10 years versus leasing every four years. Does anyone know ?
Trixie says
What a great choice! We did the same thing. Our home is a two bedroom — not the least bit fancy. We are working slowly on making things the way we want them inexpensively.
We are thrilled with a lower payment and shorter loan term. Having a big expensive home is just not worth the worry for us:)
Take Care,
Trixie